Loan modification is one of the fastest and most effective ways to put a halt on an impending foreclosure. The process should be handled by an attorney or mortgage professional to ensure that all the dates and deadlines are met in time to prevent the seizure of the property. Loan modification is for a borrower who has been late, is currently late or believes that they will be late on their mortgage payments. And at the first hint of financial distress, the borrower may wish to seek out a loan modification professional.
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The process of a modification involves a re-negotiation of the mortgage payment terms, restructuring it to meet with the borrowers income and ability to pay. Contrary to popular belief, the bank does not want to foreclose on the property and is ready, willing and able to refinance the loan balance in order for the borrower to keep the property. When a home is foreclosed, the bank receives nothing toward the loan balance and may be subject to paying the property taxes at the end of the year. And even if the property is sold at an auction, current home price values make the recovery of the banks investment into the property impossible. The bank does not want to seize your home, but rather, it is fiscally imperative to them that the homeowner retain the property.
The modification professional will need to collect financial data from the borrower that substantiates their request for the loan restructuring. This will include the current tax forms, income verification and unemployment status of all those included on the loan statement. Once the paperwork is in place, the loan modification service will contact the lender and do battle to arrive at a new and lower monthly mortgage payment that is fair and equitable to both parties.
Fees for the modification process should be collected at the end of the negotiation process, and only when the loan modification has been a success. Although it is impossible to project what the new loan balance will be, a qualified loan modification provider will take into consideration the total monthly budget for funds to include food, gasoline, entertainment expenses, etc. The new mortgage balance should reflect what the borrow is able to pay, with all mitigating factors considered.
Borrowers who wish to execute the home loan modification process on their own may be able to effectively negotiate with their lenders, however, buyer beware that the lenders often use double talk meant to confuse and bemuse the borrower. What may seem to be a victory for the borrower may turn out to be a complicated deception. There is no substitute for hiring a professional to re-negotiate your loan, get the terms in writing and be sure that all transactions meet the deadline before foreclosure paperwork hits the courthouse steps.
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