Tuesday, December 16, 2008

Mortgage Loan Modification - HOW TO's

(Source: Ron Stephens)

These are incredibly challenging times for American homeowners. More people than ever before are considering mortgage loan modification as an alternative to the possibility of losing their homes. The need for banks to consider loan modifications for homeowners has come about because of various reasons:

  • Adjustable rate mortgages that have adjusted up and increased monthly mortgage payments beyond their ability to pay.
  • Some homeowners took out adjustable rate mortgages, expecting to refinance at a better rate later, only to find their home's diminished value won't support a sufficient loan amount to qualify for refinance, and therefore they can not take advantage of new lower rates.
  • Many have lost their jobs, some having worked for the same company for many years, and now can't afford their payment.
  • Retirement income that would have helped pay off the mortgage, lost in the stock market crash.

If any of these situations describe you, there is hope. Because of the tremendous number of people facing foreclosure, banks are more willing than ever to work with homeowners in several ways. They know that the epidemic proportions of distressed homeowners, has created a bigger challenge than foreclosing the loans of so many people who are in default, can overcome. Here are some possibilities for you if you need answers:

Short refinance: Your lender may be willing to lower the balance on your home mortgage, create a new loan at the lowered amount, and thus give you a lower payment.
Short Sale: If you just need to get out of your house, your lender may be willing to let you sell the home to another party, for an amount that is less than what you owe, and forgive you of the difference.
Loan Modification: Your lender may restructure your loan, add any late payments to the balance, create a new loan amount with new parameters.

Whichever one of these options that your bank may be willing to consider, depends on your personal standing with them, and your financial situation. Here are some things that you must do if you want your bank to consider a mortgage loan modification on your behalf:

Communicate with them early on...DO NOT avoid talking to them about your hardship.
Keep a proper perspective...They are not the enemy. You owe them the money, having borrowed it with the promise to pay it back. Don't get angry with them for your difficulty. Respect them, and you have a better chance of them working with you.

Ask them for help. If the person you talk to is not willing to help you, keep calling and asking for a supervisor until you get someone who will listen and try to help.

Consider enlisting the help of a professional "loan mitigation service". You may have to pay a small fee, but these people are very good at what they do. They have the know how and the resources, and the credibility that will get your bank's attention and cause them to be more willing to work with you.

The bottom line is: banks are more willing than ever to enter into mortgage loss mitigation with their customers. And if you do enough research, and you are patient and stick to the process of filling out many forms and making many phone calls, and being put on hold for long periods of time, you may be able to get a mortgage loan modification, and save your home and your credit.

If the thought of doing all of that causes you to break out in a cold sweat, and feel like giving up before you even start, than you should consider a loan mitigation specialist. They are available online, in the yellow pages, or you may be able to get a good one referred to you by a realtor or mortgage broker.

What is Loss Mitigation?

Back to Foreclosure Information

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