Loan Modification
An increasingly popular alternative to foreclosure is the loan modification, an agreement where the bank and borrowers reduce the cost of the loan for a period of time to allow payments to be made on time. A loan modification is much like a mortgage refinance in that the objective is to find you a more affordable mortgage payment for your financial situation. Refinancing your existing mortgage to obtain a more affordable mortgage payment could still be an option. However loan modification is often the best solution for the homeowner that has incurred a financial hardship that prevents other mortgage financing or payment options. The purpose of a loan modification is to help make the loan more affordable to the borrower.
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. Loan modification is a relatively new term for most people, but with the current market conditions and mortgage crisis, it is becoming increasingly popular. When possible, loan modification is a preferable alternative to bankruptcy. Additionally, loan modification is a more fiscally attractive solution for any lender.
Loan modification programs are typically designed for homeowners who are having difficulty making their mortgage payment, but who can’t qualify to refinance their mortgage. Loan modification may include reducing the interest rate, extending the term of the loan from 30 to 40 years, or adding missed payments to loan balance. Loan modifications are not the same as debt consolidations, refinancing loans, or even forbearances. Loan modifications stop foreclosure proceedings and instead reinstate the loans as they are being modified.
The lenders motivation in modifying a loan is that this is a better alternative to foreclosure. However, homeowners today are under the false impression that they cannot apply for a home loan modification if they are not in foreclosure. A loan modification allows the lender to transform a non-performing asset into a performing one and avoid the cost of foreclosure. The bottom line is that a loan modification is intended to reduce the payments for the borrower, make it more affordable, and reduce the risk that the homeowner will default on the loan.
So here again, loan modification is preferable, in that a renegotiated loan agreement allows you to keep paying down your monthly mortgage while maintaining your credit rating. Whether it’s reducing the borrower’s note rate or monthly payment, or extending the maturity date, a loan modification is a possible option for a borrower in default.
Understanding the plight facing homeowners today and the very real threat of foreclosure, assistance during the process of applying for a loan modification is essential. It is important to make the lender work with the homeowner to provide the best possible solution before it is too late. In the final analysis, loan modification is usually preferable to filing for bankruptcy and is a fundamentally sounder strategy than defaulting on the entire mortgage and creating costly foreclosure proceedings.
Great description of the Loan Modification “world”. I’ve been in business successfully in the loan mod industry for more than 25 years; me and my partner Richard are starting a new company called Wealth Informational Services Inc (WISI). Our main goal is to help regular people effectively perform their own loan modification and save a lot of money while doing it. We are launching our first Do It Yourself Loan Modification E-Book in a couple of weeks, something that is going to help people with the process and includes all the secrets we have gathered in more than 25 years. I just wanted to say that your description of the loan mod situation is right but we think you can do it yourself and save money.
Anthony
Thanks for the post and the compliment. I agree that Loan Modification is something that people can do on their own and save money. But as with everything there is a big IF. The analogy that pops to mind is that some people are really comfortable changing out a light fixture in their home and others have no idea how to do it safely. Programs like the one you are trying to launch can save people a lot of money if they are comfortable with their ability to understand the pitfalls and negotiate well on their own behalf. Other folks really need the help. My view is that everyone has to know their limitations (thats pretty much true in everything in life isnt it?) and if they need help, find someone they can trust. Best of luck with your venture. People really need the straight scoop on how to deal with this type of situation!
You are absolutely right, some people are not ready for a loan modification process and they need to understand that is something that requires work. With that said, we believe that by presenting this guide we will be providing Americans with the alternative to do it on their own. Hopefully this industry will get rid of all the scammers and people that hurts businesses like ours that have been functioning for over 25 years.
I’ll be more than happy to keep hearing your opinions, please follow us on twitter (loanmodgurus), facebook (Loan Modification Gurus) and linkedin (Anthony Sellitti); also check our blog if you have the chance (wwww.loanmodgurus.wordpress.com) and leave your comments.
Sincerely,
Anthony