We got a loan modification, it’s not much so can we counteroffer?

Q:  I have been struggling to make my house payment since losing my job of 12 years about six months ago. I’ve gone to two classes being offered on government programs, and a Saturday seminar in Vallejo where a number of banks, including mine, had counselors to help people like me. At the meeting the bank offered us a three month trial period in which we agreed to make a payment on time each month. We completed the three month trial period with our lender. As a result, they sent us a packet with their proposed loan changes and have given us a deadline to sign and return them. In reading the “new” loan terms they don’t really look any different than the current loan. It’s got the same balance and they dropped the interest rate a whole .25 of a percent. My question is, do we have any leverage to make a counteroffer to the bank in order to get them to adjust the terms of the offer?

A:  Leverage? Nope. None.

Home loan modifications get all the press. It’s hard to turn on CNN, MSNBC, or even the network evening news without the words “loan modifications” sneaking in there somewhere.

Although I’ve sensed in the past six months that this situation is getting a little better, the truth is those of us on the frontlines of the housing crisis see pathetically few loan modifications, at least modifications of any substance.

I use the word “pathetically” not as a value judgment regarding whether homeowners who are over their heads should be bailed out. But rather, I use the word carefully to compare what the banks say they are doing with what they are actually not doing.

Specifically, they still aren’t significantly modifying loans.

All I know about your situation is what you put in your email. But here’s my best guess about the rest of your situation.

You approached your bank’s modification department (they’ve all got modification departments) and have done everything they asked you do to. You filled out mountains of paperwork. Plus, you undoubtedly gave the bank extremely detailed financial statements and wrote an intricate and very personal hardship letter about how you came to be in this predicament.

If you’re like many people I’ve met with over the past four years or so, you have repeatedly called the bank only to be told they didn’t get this paper or that, which you immediately had to dig up and fax over to them.

Last year you got excited about a new series of California laws that seem to require lenders to working conscientiously with you. Now you’re wondering what happened to that.

Then you made three payments.

Now they’ve sent you loan modification terms that are really of no value at all.

In any event, the modification the bank is now offering is not enough.

The federal government has finally come out with a few programs that seem to be working for some homeowners, but not everyone, and maybe not even many.

You can absolutely try to get better terms. I’m not confident, but you can try.

At the end of the day, the lender holds all the cards when it comes to modifying your loan. If there was a hammer you could use there would be a million carpenters out there.

Tim Jones is a real estate attorney in Fairfield. If you have any real estate questions you would like to have answered in this column you can contact him at SolanoScene@TJones-Law.com.