Loan Modification Services
In recent months Loan Modification Services have become increasingly popular. If you are behind on your mortgage payments then you are not alone. The FDIC estimates that 6.4 million loans are currently past due or are projected to become delinquent by mid 2010*. Lenders are reeling from the costs of home foreclosure. Both borrowers and lenders have found that negotiating new terms is often a better solution to past due mortgage payments than the hard line approach that collection departments have taken in the past.
Getting To The Loan Modification Table
Lenders have customarily used two different departments to deal with homeowners that were behind on their mortgage payments. If you have ever been behind on your home loan then you probably have received calls or correspondence from your lender's collection department. Speaking to a debt collector is not on most people's top ten things to do.
Do to the fact that people avoid debt collectors like the plaque, this has created a problem for lenders that are now asking homeowners to contact them regarding mortgage loan modification.Many homeowners that have been so put off by the collection department of their lender that they assume there are no alternatives available to them other than paying up on their past due payments or foreclosure. Unfortunately this has resulted in loss situation for both the homeowner and the lender. Beginning a dialogue with your lender can be half the battle to getting a loan modification.
If you you are behind on your home mortgage payments due to a loss of income, illness, increased payment, or unexpected expenses, you may be able to qualify for a loan modification program with your lender. The next step is negotiating your new payment. Whether you decide to attempt this on your own or you choose a professional loan modification service is really up to the individual and their time available, negotiating skills, and confidence that they can produce a favorable settlement. Fees for loan modification usually consist of a small processing fee and a settlement charge in the area of 1% of the amount of the mortgage. Some providers charge more, some less, there really is no industry standard as of yet.
While cost is a factor, the performance, effort, and experience of a loan modification service should also be taken into account when making your decision. Weed out foreclosure rescue services that offer solutions such as complicated purchase plans that offer to buy your home, lease and later sell it back to you. The "We Will Buy Your Home Fast" concept is an area that should raise a red flag. Don't sign quit claim deeds, blank documents, or be pressured to sign anything that you do not fully understand. If your agreement is unclear take it to an attorney for review. It's a small price to pay for peace of mind.
How Loan Modification Works
The first step with a reputable loan modification service is guiding you through an initial interview to determine your ability to qualify for a program. This is standard practice. It is not in their interest or yours to waste time if you do not qualify. If your home is in or approaching the foreclosure process then time is your most precious commodity. Use it seeking your best solution.
If the service determines that you are likely to qualify for a loan modification plan the next step will be gathering documentation from the applicant. This consists of collecting pay stubs, copies of tax returns, recent home appraisals, current loan information, and various other documents to support your application.
After all documents are organized and your lender has been informed of your intent to seek a loan modification the negotiations phase begins. This is where experience can make a difference. Knowing the available options, which apply to your case, and what to expect as a reasonable outcome can be well worth paying for.
When the negotiations process is complete you will be presented with the results and your options. At this point you have the option of choosing a loan modification or proceeding to another solution. Keep in mind that nothing about your loan modification is "carved in stone" and can be re-negotiated in the future.
Loan modification programs are becoming the standard solution to foreclosure. Whether you choose a professional service or take the do-it-yourself route is up to you and your confidence in your ability to produce a favorable outcome. If you are in the process of deciding on which service to use then browsing through the information contained here may familiarize you with how the process works and what to expect from it.
* FDIC Loan Modification Program Overview http://www.fdic.gov/consumers/loans/loanmod/loanmodguide.html
