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This seems a rather basic question to be asking in a website dedicated to commenting on blown mortgages and how to pick up the pieces. However, it is sometimes useful to sit back and ask ourselves the basics again to reassess our understanding and check we are still on the same page.

Loan Modifications are a change to a loan contract between the lender and the homeowner. The whole purpose is to adjust the terms of the contract so that the loan is affordable for the borrower. Loan Modifications have changed in the last years. Previously they existed only in the form of an interest rate reduction for a period of time when a delinquent borrower was suffering from a specific type of hardship, as a divorce, illness or a job loss.

Now loan modifications are provided for a wider set of circumstances and usually change the terms of the mortgage permanently.

What has not changed is the raison d’être of loan modifications; to help homeowners that can afford their home but not their current mortgage. This means that the homeowner has the ability to make reasonable monthly payments on their home but their current mortgage payments are to high.

Understanding this is vital to understand why so many homeowners apply for a trial loan but will never get one.

The second key factor that makes a homeowner eligible for a loan modification is the existence of a valid situation of hardship. A borrower must make sure they can prove the hardship and that it qualifies them to apply for a loan modification.

These are examples of hardship that give you a good chance of getting approved: ARM, adjustable rate Mortgage, reset payment shock, illness of a close family member dependant on you, loss of job (as long as there is proof you will be able to meet the modified payments), reduced income, death of the borrower (that is an excellent one), death of spouse or co-borrower, military duty, medical bills, damage to your home, not being able to sell or rent the property.

However excuses like: I didn’t realize how expensive it would be, or my realtor/lawyer/wife lied to me are just not going to work.

The third factor is accurate documentation. You don’t only have to be able to afford your home and undergo a valid situation of hardship; you also need to prove it with proper documentation.

These three points are the ABC of successful loan modifications:

a)      You must be able to afford the payments of a reasonable loan modification.

b)      You must be experiencing some type of valid hardship.

c)       You must be able to prove it.

Convincing your lender or loan servicer of the truth of those three factors is the most important part of applying for a loan modification. You must focus all your energy in making these three points loud and clear when you communicate with your lender, whether your are speaking on the  phone or writing your hardship letter.

Related posts:

1. Loan Modifications, NPV Test the Key to Loan Modification Success
2. Obamas Loan Modification Success Explained
3. Loan Modification Applications, What Are Lenders Looking For?

Related posts:

1. Loan Modifications, NPV Test the Key to Loan Modification Success
2. Obamas Loan Modification Success Explained
3. Loan Modification Applications, What Are Lenders Looking For?

Relief at the end of the tunnel of debt.

Those of us that have been or are in serious debt understand how horrible it is, the terrible feeling of being trapped by debt with no relief in sight. Debt leads to bad credit which leads to bad loans which further immerse you in debt.

It is like a dark tunnel that slowly chokes you, what is especially sad is that only too often we ourselves are doing the choking.

In fact allow me to illustrate what debt is like with the killing technique of a boa constrictor. This snake is amazing it can kill anything up to the size of an antelope (or a man)  and swallow it whole. Many believe that boas kill their prey by crushing them to death with their powerful muscles. That is untrue, as strong as boas are they cannot crush the ribcage of a large animal. What they do is constrict the ribcage from expanding. They wait for the prey to breath out, lowering the ribcage and then tighten their grip again. This causes the victim to in a way kill itself by breathing out and out, leaving less and less room for the ribcage to rise, eventually dying of lack of oxygen.
Often, with debt something similar occurs, we dig our own grave and jump straight into it. How does this happen? Debt is such a depressing and “choking” situation to be in that we often get into a panic trying to find a way out. We struggle to pay our rent, our mortgage, insurance, failing to pay any of these important bills can lead us to being homeless, lose our home or get in even more debt due to medical bills. On top of this people who are in debt often got there because of an out of control spending habit that doesn’t fix itself just because they are in debt, it continues, causing the person to carry on spending and getting further into debt.

I remember a workmate who was in serious debt, with a wife and a newly born baby, they had lost their home and were living with their parents. Well, he was depressed about his situation but would still use his credit card to buy computer games and on other hobbies. I have nothing against spending money on your hobbies but you might want to start trying to get to the end of the month with food in your fridge before buying the last sequel of worldcraft.
So how can you find relief from the dark tunnel of debt?

Here at Blownmortgage.com we have decided to dedicate a whole section with various blogs to debt relief, we hope it is helpful. This blog will set the tone with a broad overview of some of the steps that can help you stop digging a hole for yourself and start climbing out of it.

1.)    Take control of your spending
2.)    Prepare a budget where you spend less than you make, or as close as possible, and stick to it.
3.)    Look for ways to “improve” your situation by smart debt  management.
4.)    Break the debt cycle

The following articles will elaborate on this rough sketch and hopefully create some light at the end of your personal debt tunnel.

Related posts:

1. Tax Relief for Mortgage Debt Forgiveness
2. Debt management, art of making the best of a bad situation
3. Common pitfalls of debt consolidation you must avoid.

Related posts:

1. Tax Relief for Mortgage Debt Forgiveness
2. Debt management, art of making the best of a bad situation
3. Common pitfalls of debt consolidation you must avoid.

Struggling to make ends meet can be a way to survive, but it gets awfully hard if you or a family member gets sick. Millions of Americans are pushed over the edge into bankruptcy or foreclosure because of high medical bills.

Struggling to make ends meet can be a way to survive, but it gets awfully hard if you or a family member gets sick. Millions of Americans are pushed over the edge into bankruptcy or foreclosure because of high medical bills.

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