Better (and cheaper) Living Through Loan Modifications

What exactly is a Loan Modification, and how does it work?

Want a lower mortgage payment each month? It may be easier than you think! Bailout money could come your way if you're behind on your payments, have an adjustable rate mortgage, your income has gone down, had a financial disaster since you got your loan, or several other qualifying factors have occurred to cause you to have trouble making your mortgage payment.

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What is a loan modification?

A loan modification is an agreement that changes your current mortgage in some way. In a sense you are reworking your mortgage agreement with your Lender to lower the amount of your mortgage payment each month to help you keep your home or property.

How does it work?

Loan Modifications can lower your monthly mortgage payments by using any of several changes to your current mortgage agreement. One way to modify your current agreement is to decrease your current interest rate thus lowering your monthly payments and allowing you to remain in your home. Another way to decrease the monthly mortgage payment to an amount you can afford to pay is to lengthen the time of the loan repayment. In some cases you may be able to change the type of loan you have, or you may be able to change an adjustable interest rate to a fixed rate. Of course some of these options are more agreeable to lenders than others and are easier to obtain. Infrequently a lender may also decrease the balance of your loan.

What can a Loan Modification do for me?

A Loan Modification will allow you, the homeowner, to remain in your home, by making it easier for you to be able to make your mortgage payments. Loan modifications will give you the conditions and terms you need if you are facing a challenging financial period. A Loan Modification may prevent you from the negative experiences of losing your home due to foreclosure and from ruining your credit scores due to bankruptcy.

Why would a lender agree to a Loan Modification?

A lender may agree to a Loan Modification to save themselves money and to keep you in your home and making payments to them. Lenders often lose money when you are not able to pay your mortgage payment. In addition, they lose money when they have to foreclose on your property and resell it, often at a price that is lower than the value of the property. It is frequently in their own best interest to renegotiate a mortgage agreement with you in order to keep you making your mortgage payments. Lenders are in business to lend money, not purchase property. This often makes them agreeable to loan modifications.

Should I Refinance or Modify my Loan?

MODIFY YOUR LOAN ONLY IF YOU ARE UNABLE TO REFINANCE —This may be the very best choice for you and the only option for some homeowners. Loan Modification can save your home, your credit, and your peace of mind! If refinancing is not an option for you because your home has not held its value or because you cannot continue to make your mortgage payments AND pay all your bills AND still have enough money to live on, then you must modify your loan in order to keep your house. A loan modification can keep you from going into foreclosure and losing your home.

What will convince my Lender to modify my loan?

Lenders must look out for their own best monetary interest first and foremost in any negotiation. While they do not want to foreclose on property, they also do not want to renegotiate a loan and still have that homeowner default on the new agreement. This would be an even worse scenario from their perspective. Lenders need to see proof that you as the homeowner are able to keep making the mortgage payments for the life of the loan. Lenders do need to feel that the homeowner places top value on keeping the home.

When a home is not producing money for the lender, it is called a non-performing asset. The lender must feel assured that you are giving top priority to keeping your mortgage payment current, and that you have evaluated/adjusted your family’s finances (cut expenses wherever possible) and possessions (boats, extra cars, motorcycles etc) in order to be able to keep paying your mortgage payments. If the lender feels that your home will continue to be a performing asset, they have a reason to agree to your loan modification.

Can I save my home from foreclosure with a loan modification?

If you can afford your home and not just your loan, you may be eligible for a loan modification. The earlier you begin the process by selecting a loan modification negotiator (such as Rescue For Homeowners), the better your chances of negotiating a fixed rate and a payment that you can manage. You should always explore your options. Loan modifications have saved many homes from foreclosures and have allowed many homeowners to keep their good credit. If your Lender or Servicer is not helping you… or if they are being abusive to you...they may be so busy with homeowners trying to save their homes from foreclosure that they do not have the manpower to help everyone. Many people simply get lost in the system and may suffer an unnecessary foreclosure when another option could have been worked out with their lender.

Do I really need legal assistance?

YES! You need an attorney-based company as your negotiator for the most successful modification of your loan. Time is of the essence in the process to save your home or property. When an attorney is involved, suddenly calls seem to be answered promptly and responses to letters are forthcoming. Often this timing can make the difference between saving your home and losing your home. With a legal ally in your corner, you can get the mortgage help you need, FAST!

Do Mortgage companies WANT to foreclose on my property?

NO! Mortgage companies do NOT want to foreclose on your property. They are not in the property-collecting business. They are in the money lending business. Mortgage companies lose money when they foreclose on a mortgage and/or take possession of property. Because of this, they are often willing to work with you in finding other options. Mortgage companies are in business to make money, and your loan status affects their financial bottom line. If you pay your mortgage, they profit and stay in business, so it is in their best interest to modify your current agreement so that you can continue to own your home and pay your mortgage.

Am I able to negotiate with my lender myself?

Unless you are completely versed in the mortgage business, property value, property law, and mortgage financing options, you should not deal directly with your mortgage company even though you could legally do so. Their expertise in their field would give them a distinct advantage over you in the negotiation process and might prevent you from receiving the modification you need. Mortgage companies are much more informed about mortgage foreclosure procedures, mortgage law, and mortgage options than the general public. You might not get your loan modified at all, or you certainly would not get the best terms possible without a knowledgeable professional to represent you. You must select a negotiator who knows as much as the mortgage company about the procedures, the law, and the different modifications available to you. Just as you choose someone to list your home for sale or to carry your mortgage, you must concentrate your time and energy on finding the very best possible agent to negotiate your mortgage foreclosure options. This person will have a huge impact on your immediate financial future, and should be someone who has actually been in the mortgage business for some time. You should be convinced that this agent is not only knowledgeable and trustworthy, but he or she should also be bold and persistent in dealing with your mortgage company. Your chosen agent should also be backed by knowledgeable attorneys who deal primarily with the loan modification process, and who are expert in forensic audit analysis, such as Rescue For Homeowners.

IMPORTANT NOTE: Make sure the loan modification company you select is approved and in good-standing with the Department of Registered Loan Modification Companies. You can visit the DRLMC here: http://www.drlmc.org

For More information on loan modifications, check out http://www.mortgagereview.net

Good luck!

Eric Tishaw - Loan Modification Expert