Mortgage Loan Modification
A mortgage loan modification involves altering home loan terms to help borrowers afford monthly installments and avoid foreclosure. Many factors are involved and the process can take months to complete. Borrowers must become highly proactive in communicating with their lender at the first onset of being unable to remit loan payments.
Factors of mortgage loan modification include: the borrower's ability to pay future installments; reasons which led to financial hardship; amount owed on the mortgage note; and amount of accrued home equity. Loan modifications do not alter the principal balance. Instead, banks reduce interest rates or extend payment terms.
Banks don't have to provide loan modifications. In fact, they only offer them if it's the best option for their bottom line. Borrower's should plan on having personal finances scrutinized and organize financial records in advance. Banks normally require income records, bank statements, tax returns, and detailed list of expenses. Loan modification procedures are similar to the process used when applying for a mortgage loan.
Mortgage loan modifications are managed through the bank's loss mitigation division. Borrowers are assigned to a loss mitigator who will work with them throughout the process. Borrowers often find it extremely difficult to speak to a loss mitigator. They spend countless hours waiting 'on hold' if they are lucky enough to even have their phone call answered.
Those unable to make contact with loss mitigation should speak with a senior loan executive. In some cases, mortgagors have been forced to retain the services of a private loss mitigator or real estate attorney. Whatever you do, please do not allow yourself to fall prey to loan modification or foreclosure rescue scams.
When a notice of default is sent to homeowners it is recorded through the court. NODs are a matter of public record and anyone who wants to view them only has to go to court or download to their computer. There are many unscrupulous people who are preying on homeowners facing foreclosure. They hire employees to scour public records so they can send out marketing letters offering a helping hand. The biggest mistake you can make is to respond to these letters or phone calls.
A trusted source for learning about loan workouts and foreclosure prevention is LoanWorkout.org. This website shares information and resources regarding loan modification programs, notices of illegal loan modification and foreclosure prevention companies, and government resources where borrowers can obtain housing counseling and loan assistance counseling.
There are hundreds of horror stories about people who have lost their home to foreclosure after working out a loan modification with their bank. In order to achieve a successful outcome, borrowers must take time to become educated about all available resources and options. Otherwise, they can quickly become another foreclosure statistic.
While a mortgage loan modification may sound like a great idea, realize it won't be an easy thing to accomplish. There are exceptions to the rule and a few lenders actually want to help homeowners avoid foreclosure. However, many banks are not helpful at all. Employees have become lazy and do not follow through on promises made. They don't return phone calls. They don't send required paperwork. If you decide to go this route it is crucial to be prepared for battle.
We offer additional resources in our mortgage loan article library to help you better understand the process of modifying home loans, along with foreclosure alternatives such as real estate short sales, deed in lieu of foreclosure and mortgage refinance. We hope to direct you to the sources you need to obtain a successful mortgage loan modification.