New jobs coming to Irvine....

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centralcoastobserver_IHB

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Just read an article on Salon regarding former mortgage brokers now setting themselves up as "loan modification specialists." One quote



"Some of the "affiliates" appear to be in pretty desperate shape themselves in these hard times for the mortgage industry. One subcontractor recently went into default on his Irvine condo -- the first stage of foreclosure -- after missing nearly $20,000 in mortgage payments. Kolahi's wife, an attorney who works with Loan Processing Center to identify illegalities committed back when the borrower first got the loan, is in similar straits. She's now heading for foreclosure on a loan for nearly $1.2 million on a home in an exclusive gated community in the Irvine hills.



"Why do you think so many loan mod companies are here in Orange County?" asks Sam Carlson brightly. "We've got cheap office space and out-of-work loan processors!"



http://www.salon.com/news/feature/2009/03/04/loan_modifications/
 
I'd like to become one... just to get my feet wet in the industry. That way I can try to slide into some of the financing deals for my businesses.



-bix
 
On the surface... it seems like this would be good business to get into as long as you're helping people... but not really:

<blockquote>

Brodetsky then shows the group at the Hyatt a redacted photocopy of a loan modification he recently secured. It cuts the borrower's monthly payment to about $1,500 -- half of what it would have been if he or she had to pay the full amount owed.



<strong>Unfortunately for the borrower, however, is that the remaining debt doesn't vanish</strong>. Those unpaid tens of thousands are waiting there to be reckoned with down the road, plus years of additional interest. "Isn't that predatory lending?" gasps one of the attendees at the Hyatt. Vondran and Brodetsky change the subject.

[...]

For many borrowers, a lower payment will be all the difference between staying in one's home and going into foreclosure -- for now. But the Obama plan is a short-term fix. It doesn't do the one thing that would actually help homeowners in the long haul, and that is reduce the amount of principal they owe. The loan mods that these brokers are selling, and that the Obama administration is now promoting, are new and improved variations on the exotic mortgages that seduce borrowers in the first place. They charge a manageable amount now, and then hit the borrower with higher costs down the road.



<strong>Most problematically, the total amount of money owed doesn't shrink -- in most cases, it grows, even with the new federal aid</strong>. Getting an actual debt reduction "[is] like a Bigfoot sighting," jokes Allen Brodetsky.

[...]

California real estate broker Ramsey Su recently offered another view of the equation in the Wall Street Journal: "Loan modification is not only ineffective, it is evil. <strong>Coercing borrowers to continue paying a mortgage on a home that is hopelessly overvalued and not informing them of alternatives is predatory lending</strong>."



Just like mortgage brokers, loan mod companies are under no obligation to act in borrowers' financial interests, short- or long-term. Under California's model contract, which brokers are encouraged to emulate in their dealings with borrowers, almost any change to a mortgage is an acceptable result, whether or not it saves a borrower money. And while the client has to accept the proposed deal in order for the company to get paid in full, the sales forces at these firms are veterans of pressure pitches to people in tough financial situations.

</blockquote>
It's the next evolution of exotic mortgage Kool-Aid.
 
Hmm, 40 cents on the dollar today, or 2% interest and full repayment in ten years? Fifteen years? Or maybe 75 cents on the dollar in five years...



The only loser is the loser needing the mod.
 
[quote author="irvine_home_owner" date=1236332250]On the surface... it seems like this would be good business to get into as long as you're helping people... but not really:

<blockquote>

Brodetsky then shows the group at the Hyatt a redacted photocopy of a loan modification he recently secured. It cuts the borrower's monthly payment to about $1,500 -- half of what it would have been if he or she had to pay the full amount owed.



<strong>Unfortunately for the borrower, however, is that the remaining debt doesn't vanish</strong>. Those unpaid tens of thousands are waiting there to be reckoned with down the road, plus years of additional interest. "Isn't that predatory lending?" gasps one of the attendees at the Hyatt. Vondran and Brodetsky change the subject.

[...]

For many borrowers, a lower payment will be all the difference between staying in one's home and going into foreclosure -- for now. But the Obama plan is a short-term fix. It doesn't do the one thing that would actually help homeowners in the long haul, and that is reduce the amount of principal they owe. The loan mods that these brokers are selling, and that the Obama administration is now promoting, are new and improved variations on the exotic mortgages that seduce borrowers in the first place. They charge a manageable amount now, and then hit the borrower with higher costs down the road.



<strong>Most problematically, the total amount of money owed doesn't shrink -- in most cases, it grows, even with the new federal aid</strong>. Getting an actual debt reduction "[is] like a Bigfoot sighting," jokes Allen Brodetsky.

[...]

California real estate broker Ramsey Su recently offered another view of the equation in the Wall Street Journal: "Loan modification is not only ineffective, it is evil. <strong>Coercing borrowers to continue paying a mortgage on a home that is hopelessly overvalued and not informing them of alternatives is predatory lending</strong>."



Just like mortgage brokers, loan mod companies are under no obligation to act in borrowers' financial interests, short- or long-term. Under California's model contract, which brokers are encouraged to emulate in their dealings with borrowers, almost any change to a mortgage is an acceptable result, whether or not it saves a borrower money. And while the client has to accept the proposed deal in order for the company to get paid in full, the sales forces at these firms are veterans of pressure pitches to people in tough financial situations.

</blockquote>
It's the next evolution of exotic mortgage Kool-Aid.</blockquote>
So who pays those loan mod companies and when do they get paid?
 
Loan modifcations are paid for by the borrower usually by incorporating fees into the loan. I have seen some and I just hope borrower are paying attention. They lower your payment but the final ballon payment is near 25% the price of the house! Also I don't think modifications are purchase money loans so may have adverse foreclosure consequences
 
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