Sites help on loan trouble

Almost 6 million Americans are behind on their mortgage payments or in foreclosure, recent data shows, and many more are draining saving and retirement accounts to avoid joining those ranks. For the lucky ones, there is a loan modification in their future.

When borrowers get into financial trouble, lenders will sometimes modify the terms of the loan to make it more affordable. They might lower the interest rate, eliminate part of the principal or do some other financial juggling to avoid foreclosure.

The process involves mounds of paperwork and lengthy delays.

There are a few Web sites that offer to walk borrowers through the loan modification application process online, including HomeownerToolbox.com (free), YourFreeModification.com ($49.99) and eModifyMyLoan.com ($129).

Each site sports a different look and features but delivers a similar final product: A submission-ready document that, along with supporting financial materials, the homeowner must mail or fax to their lender to be considered for a modification.

The sites also offer tips on how to better understand the loan modification process and avoid mistakes on applications.

Borrowers, however, should also check their lender’s Web site because many of them, including JPMorgan Chase and Wells Fargo, have applications that borrowers can download at home or fill out online.

For those who need extra help navigating the process, there’s an array of nonprofit housing agencies with counselors certified by the Department of Housing and Urban Development that provides counseling free of charge at www.hud.gov/foreclosure.

Kathy Germain, director of homeownership at one such agency in Kingston, N.Y., says borrowers should be wary of services that charge them money to handle their loan modifications.

“The key for consumers is if somebody wants money upfront, they should really be thinking twice about moving forward,” said Ms. Germain, who works at Rural Ulster Preservation Co.

When HomeownerToolbox started in April, the company charged a $99 fee but eliminated it in July and now looks to make money by selling a version of its software to home counseling agencies.

The site claims it can predict the likelihood a borrower’s application will get a thumbs up from the lender. The Web site’s Success Probability Meter gives a range of success between zero and 100 percent.

HomeownerToolbox says it has reviewed 3,800 loan modifications during the past 18 months and claims to have identified that “sweet spot” for about 70 lenders. The company has created an algorithm it says reveals a lender’s required ratio of debt to income for approving a loan modification.

“There’s a consistency among the approvals,” said Andy Firoved, chief executive of the Irvine, Calif.-based company behind the Web site.

You won’t find any oddsmaking at eModifyMyLoan.

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