MY LOAN WAS SOLD.. WILL THAT AFFECT MY LOAN MODIFICATION?

Loans being sold is the reality of lending today. This occurs because most lenders actually don't have a vault of money from which to lend you money from. Most lenders simply have "wharehouse credit lines" which are essentially high limit credit cards in the multiple millions. They fund your new loan by charging it to their wharehouse line until the loan is actually sold to a much larger investment banking organization.

The investment buyer, usually Bank of America, Chase, Wells Fargo, or Citicorp, can hold your loan for a much longer period of time because of their robust liquidity. The main reason lenders sell loans off their wharehouse line is because their wharehouse credit line is limited, just like the space on your credit card has a limit. Holding a loan too long limits the average lender's line and eats up their capacity to fund new loans. Selling the loan also gives the investment banker buying the loan a security instrument that can be traded as an investment vehicle on Wall Street.

You should keep this in mind when speaking with your lender who in all likelyhood is really actually not holding your loan at all. The lender's name that appears on your monthly statement is actually called the "servicer" of the loan. They are the ones that report the status of your loan to the credit bureaus, provide customer service, collect and post the payments to the account and let's not forget, handle your loan modification request.

There is actually an unseen investment community receiving the interest benefit of your payments. This investment community is more like a complicated nexus of junior and senior ranking investors, all who are positioned in a food chain of sort to get their share of the revenue that's generated from your monthly payments. It's your lender's (servicer) job to communicate with the investor community to rework your terms. Also keep in mind that they probably have not hired additional staff to do this for you. In fact they may even have laid off a bunch of workers because of the state of the economy.

Remember, after your loan closed, it was packaged up, bundled, pooled and in many instances, sliced up into hundreds of pieces and sold off. Your loan is probably in a thousand different pieces all over the world. This does not mean that you cannot have your loan modified but the details of reworking a product that has already been rationed, distributed and sold is arduous so be patient and know that getting a resoultion can take months. The good news is that lenders have working arrangements with the investor community due to the high volume of loan modification requests.

Do I Need an Attorney to Modify My Loan?

You absolutely do not require an attorney to request a loan modification. In fact you lender would prefer that you don't have one. Why? Your lender is the only party that can voluntarily modify your loan. An attorney can send a modification request to your lender just like you can, except the attorney will charge you a lot of money for doing so. It may be helpful to hire a document preparation service that can draft the correspondence for you if you have difficulty with the necessary language. A document preparation service will only charge a small fraction of what the associated legal costs are. You can expect to pay about $100 dollars for document preparation services in connection with a loan modification.

The lender does not shake when they see a modification request prepared by an attorney and many lawfirms or "loan modification companies" market their services as an assured bridge between you and a much lower payment. The lender is not going to say "let's settle this one" like the old Jacoby & Meyers commercials that dramatized the moment the insurance company receives a demand letter from the world renown law firm. You lender will honor a scensible request prepared by you, their customer, as long as it is written, well thought out, and demonstrates good faith on your part.