The NYTimes had a good article last week about some of the difficulties in actually completing loan modifications. One of the major hurdles is that loan servicers are not staffed to handle the labor intensive work of loan modifications. One of the main complaints by consumers in attempting to complete a loan modification or get approval for a short sale is the many months it often takes for the loan servicer and bank to sign off. As the article points out, most loan servicers are lightly staffed and only equipped to collect checks and send out statements. Adding loan modification services includes hiring people to negotiate and draft loan modification documents, getting approvals from whomever actually owns the loans (another complication as the article points out) and the work it takes to follow up with the borrowers or their lawyers.
Loan modifications and short sales aren't profitable practices either - as banks are losing money in the process. But foreclosures usually cost even more, so banks are willing to foot the bills for additional staff. Nevertheless, it stands to reason that loan servicers aren't eager to hire a lot of extra staff to speed up a process that is ultimately a money-losing operation.
When representing clients in my law practice for loan modification services or providing legal assistance getting approval for a short sale, I am always confronted with the question of how long will this take. And because of the staffing issues and the wide variety of work-outs between lenders/loan servicers, my only answer can be "It depends."
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