How much can someone charge on a loan mod?

[Herm M.]

A lot of us short-sale flippers have the same goal: to find as many listings as possible. But we all run into people who aren't willing to short-sale their property, and they would like to attempt a loan mod.

I haven't done any loan mods, but the lady I work with does them occasionally, and charges $2500.

Getting a loan mod and versus getting a short-sale approval is essentially the same amount of work. A short-sale flip in California will make us $25,000+ per deal, so I don't see it being worth our time to do the same amount of work for only 10% of the income.

So here's my question:

Can we charge our clients based on how much we reduce their principal loan balance, on top of the $2500 standard fee?

We will be collecting nothing up-front.

Let's say someone owes $600,000, and successfully complete their loan mod and their balance is reduced to $500,000, not to mention I get their rate dropped. I will charge $2500 for dropping the rate...and I want to charge a percentage (I'm thinking 7%) on how much I reduce their principal.

So in this scenario, I would charge $2500 + $7000, because I reduced their balance by $100,000.

As long as the customer agrees, is this legal?

[Josh Green]

Originally posted by Justin S.:

HMann

How do you plan to prove hardship if the homeowners can afford the property but chose not too? If the homeowners can afford the property and do have money in the bank, how are you protecting them against a deficiency judgement and are they still willing to sell their house knowing that a deficiency may be filed?

C'mon Justin! It's a simple conversation really.....

LoanMod: Hi, (insert bank name here), my client has $45000 in the bank and doesn't want to pay their agreement with you anymore because the market tanked. They owe you $685,000 and the house is worth $300,000. As you can see, they quit paying their mortgage 3 months ago.

Bank: Oh, I do see that. You mentioned that they have $45000 in the bank, they can afford the $4000 a month payment! Why aren't they paying us?

LoanMod: Well, cause they don't want to!

Bank: Oh, ok. How about if we just make it a $200,000 loan? We'll give them an extra cushion just incase the market continues to fall. We don't want them to be in this situation again! Afterall, we are your friendly neighborhood, not-for-profit bank!

LoanMod: Eh, $200,000? HMMMM, Can you throw in a toaster?

Bank: Let me check with my supervisor.....(beautiful orchestral pop music)........Hi, LoanMod? Sorry about the wait. My supervisor gave me clearance to not only give you a toaster, but also a loaf of bread since you had to wait on hold for 28 seconds.

LoanMod: Can you make it wheat bread?

Banker: Absolutely!

LoanMod: Thanks!

Banker: No, No, No, THANK YOU!