What is a loan modification?
As a 15 year veteran of the mortgage profession, I would like to introduce myself and share some valuable information with you regarding loan modifications and short sales. If you are one of many struggling homeowners who have fallen behind on your payments and are desperate for help, you will be glad you read this information first. The one thing that I will promise you is this: No Fluff, No Bluff, I will tell just like it is, and how you can get the best deal for yourself. What is a loan modification?
According to The US Department of Housing and Urban Development (HUD), a Loan Modification is a permanent change in one or more of the terms of a mortgagor's loan, allows the loan to be reinstated, and results in a payment the mortgagor can afford. In other words, in simple layman's terms, a modification is NOT a refinance, but a renegotiation your of current mortgage terms, which could include but not limited to: a new interest rate, a new loan term or amortization schedule, principle reduction, and most importantly, a new affordable monthly payment.
But beware if you are shopping around. There are many legitimate firms that can help you get a good deal, and there are also plenty of scams and individuals out there that will promise you the world , take your money, and leave in the same position you started at. How do you protect yourself ? well here are a few tips.
TIP # 1
Do it Yourself
Always first contact your mortgage company yourself and try to work out a loan modification for yourself. Do this first before you call an outside source. Why? Because you will save money, that's why! You can save yourself a few bucks if you can work out your own modification. Where do you start ? Every mortgage company, bank, or loan servicing company has a loss mitigation department. But the key is this, you don't won't to speak to just anyone in the loss mitigation dept, you want to speak to someone who can make the decisions on your current situation. That being said, you should always try and contact the manager or supervisor. These managers usually are the ones that say nay or yea to your request. They also usually have inside contacts with the share holders and investors of the lending institution. They also know the real write down figures and losses the banks are willing to take in order to make it a good situation for both parties involved, and they are more likely to be able sign off on exceptions as well. Of course, the good part about requesting a loan modification yourself is you will save $2,500-$10,000 (average cost for services). The bad part is that it can be very time consuming, very aggravating and sometimes not a very good experience. Some lenders can implement a loan modification in 7 days, others can take up to 90 days, it strictly depends on what mortgage company you are making your payments to.
Tip # 2
Do Your Homework
If you decide to to go to an outside source for loan mod, make sure you are dealing with a real professional company and a real professional person. DO NOT do business with firms that try and get you to sell your property to them and then( you the homeowner )become a renter, or they may try to slickly talk you into a lease option deal, or short sale where you are left with a deficiency balance that may cause you to pay more taxes. An attorney you can trust is good place to start, one who practices real estate law is preferred. However attorneys who practice loan modifications are very expensive, usually from $2500-$10,000 depending on the size of the mortgage and value of your home.You should also be mindful to work with mortgage loan professionals, not customer service agents. You want to work with people who understand the mortgage industry as a whole and not someone just looking to make a quick buck.
Recommendations
Although we encourage you to work with your lender if you are a payment or two behind, the reality is homeowners who've tried to negotiate on their own behalf in many cases have come out with something worse than they started with. Mortgage Bankers are used to speaking with borrowers who know very little about their loan, the new laws, or any mortgage note renegotiation laws or statues. Many times homeowners are taken advantage for that very reason. The last thing I say in this article will probably be the most important, DO NOT just do nothing, either call your lender and try to work out a modification yourself, or hire an experienced professional team to get you the deal you want, remember you worked hard to get your home, take every step necessary to keep it.
Visit our website at http://savemyhome2day.com or call us at 1.888.227.0205 for a free no obligation consultation.