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Taylor
McKenzie, 6-15-09
Loan Modification
Defined
A Loan Modification is a negotiation between a
lender and a borrower whereas the loan terms
are restructured without refinancing. The rate
and terms of the loan are restructured to fit
the current financial situation of the
borrower.
Banks and lenders would rather take less money
and keep homeowners in their home making a
payment that they can afford, rather than go
through the expense of foreclosing on the home,
hiring a listing agent, rehabilitating the
home, and letting it sit empty on the market
for months, only to lose thousands in the
process.
A loan modification is a good solution for
those who cannot refinance, are behind on
payments or struggling to make the payments,
have experienced a genuine hardship, and want
to stay in the home. A loan modification is a
permanent solution and is not meant to be used
as a temporary stop to the foreclosure
process.
Are Lenders
and Banks Really Willing To
Negotiate?
Absolutely! In these market conditions, banks
and lenders have been mandated by the
government to do everything they can to work
out a payment plan with their borrowers. This
is a great thing for today’s borrowers
especially for those who are running late on
their payments or are having trouble making
them on time.
Lenders do not want to foreclose on your home
unless they have no other alternative. If you
can present them with a realistic proposal that
makes sense, they are very open and receptive
to the loan modification process.
Who
Qualifies For A Loan
Modification?
Anyone who can prove they are having a tough
time or “hardship”. Especially those who are at
least one month behind on a mortgage payment,
hose with negative amortizing loans, those with
loans that are about to adjust, those who are
upside down on their loan and those who would
rather keep their home than do a short sale.
One of the perks when doing loan modifications
is that there are no credit checks so everyone
qualifies in that respect.
The bigger the hardship you are having, the
more negotiating power you have with your
lender. Remember, they don’t want to foreclose
on any more homes. They would rather keep
someone in the home and create a solution that
will be affordable rather than go through the
cost and expense of foreclosing on the
property.
Should I
Hire A Professional To Negotiate A Loan
Modification?
There are several advantages of hiring a
professional, but you must also be very careful
if you choose to use a loan modification
company that takes a fee up front to negotiate
your loan modification for you. It can end up
costing you another month’s mortgage payment in
exchange for false hope. No one can ever
guarantee a successful modification, so NEVER
spend any money with any company unless they
can guarantee your money back if they’re not
successful with the modification.
Whatever you do, don’t ever give up without
doing all you can to save your home. You have
several options you may or may not even know
about. Don’t just let the bank take your home.
You do not want a foreclosure on your credit
report.
My book, "Surviving Your Credit
Meltdown", goes into detail in regards to what
your options are and how you can get help for
free.
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