- The Washington Times - Monday, September 7, 2009

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.

“We’re not going to get into that game,” says Omar Kassem, the site’s managing partner. “I don’t think it’s up to any technology company to dictate whether someone qualifies or not. In the end, the control is in the lender’s hands.”

The site, based in Scottsdale, Ariz., leads users step by step through filling out information on a form, writing the hardship letter and printing out the final package.

The site, which launched June 1, also has articles and other information on loan modification. Part of the portal’s $129 service includes access to a call center staffed with employees who can answer questions if users get stuck.

“We don’t provide consultation or advice,” says Mr. Kassem. “Essentially, it’s an entirely do-it-yourself application.”

Mr. Kassem concedes that while a free site or service is the most affordable option, it isn’t always best, noting that counseling agencies and lenders are often unable to deal with the volume of applicants.

“This is kind of a time-sensitive circumstance people are in,” says Mr. Kassem. “They need these loans modified quickly, and the process is anything but quick.”

YourFreeModification — which isn’t free — bills itself as an alternative to law firms and other companies offering to act as mediators between homeowners and their lenders for a fee.

The Web site features an application form customized for each lender and broken down into sections where users can enter information about their income, assets, expenses and mortgage, among other categories.

One of the pages is for writing the hardship letter, or a statement describing why you need a loan modification.

Once all the details are entered, a user can download a file with the formatted application.

Dave Brown, president of Household Savings USA, which operates YourFreeModification, says, “We want to provide a product that helps those people that may not be able to do it on their own.”

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