A loan modification is an agreement between you and your lender to ultimately save your house from foreclosure. There are many loan modification programs available, the results of which vary based upon your personal situation and hardship. A loan modification may be the only way for a homeowner to save the biggest investment of their life, their home. Negotiating with the bank for a modification of your home loan can be an overwhelming process for many homeowners

A loan modification with a real estate attorney may offer a more favorable agreement in the end than your lender may offer you directly. Banks do not want a mortgage to consume an entire monthly budget. They will take the homeowners entire budget into consideration ie; car payments, cell phone, utilities, credit cards payments, etc.  Banks DO NOT want your home - they’re not in the business of real estate, but paper. An average foreclosure costs a bank $50,000.00

Lenders are beginning to see the benefits which can result in relatively smaller losses than foreclosure. Borrowers have a clear benefit to seek loan modification since a lower monthly payment can help them keep their home. Lenders are currently overloaded with requests, the first step of which is to send a hardship letter to notify them of your intent to change your loan. The hardship letter should clearly state the facts in a concise manner and should not resemble a short story. Most lenders will want a detailed accounting of the homeowners` finances, or a financial worksheet, to accompany the hardship loan modification letter

Lenders and servicers will, in general, look for one thing when you submit a loan modification request. They look for a documentable hardship of course, but at the end of the day if they decide to grant your request for a loan modification all they really want to know is if you can afford the new lower monthly payment.

Lenders rarely put a stop on the foreclosure process until a workout solution is fully in place. You should ask your lender if your attempts to negotiate a solution will stop or at least postpone other collection actions.  Lenders also often require homeowners to sign a release of any and all legal claims based on the origination and servicing of the loan as a condition of the loan modification. It makes sense to have your mortgage reviewed to make sure there are not relevant claims being waived.  A loan modification is not a guarantee against foreclosure if you fail to meet the terms of your new modified mortgage.

This entry was posted on Saturday, April 11th, 2009 at 5:05 pm and is filed under Loan Modification. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.