The term refers to the "process by which the terms of an existing loan -normally pertaining to a home loan- is being amended, at the approval of the lender, to make the current terms more affordable to the borrower or homeowner," explained Michael Macapagal
, a title insurance industry veteran with offices in Daly City and Hayward, California.
e distinguished the process from "a refinance," or"a new loan which could involve a new lender who will pay-off an existing loan."
"Modifying a loan" means "dealing with the same lender and amending the exact same loan," Macapagal
emphasized the two basic requirements for loan modification eligibility.
homeowner must be:
* experiencing financial hardship due to the economic crisis (includes owing more than the property is worth), and
* able to meet new mortgage obligations if the application for loan modification is approved
said that while the California Department of Real Estate
has certified "certain real estate licensees to process the loan modification on behalf of homeowners... and...attorneys are also legally permitted to perform such services, a recent law bans both real estate licensees and legal practitioners to charge advance fees for such services."
The poor economy has contributed to the proliferation of "shady agents...offering exorbitant fees," said Macapagal
, or giving "bad advice."
"The bottom line is that people should understand what they are getting into," said Macapagal, who is president and CEO of First Southwestern Escrow, a founding member of the Filipino American Real Estate Professional Association and a board member of the Filipino American Chamber of Commerce- San Mateo County."My advice is for the homeowner to be involved in the loan modification process himself or herself.