If it wasn't obvious already, we're finding out more and more through conversation with consumers how little they know about their options regarding their distressed home. Let us remind everyone, that Section 1403 of the new housing bill that was signed into law on July 30th, 2008(HR 3221 - effective immediately) requires mortgage servicers to modify loans for homeowners and help them avoid foreclosure as long as three requirements are met:

1. Default on the mortgage either has already happened or is "reasonably foreseeable"
2. The home owner is living in the property as his or her primary residence
3. The lender is likely to recover more through the loan modification or workout than by forcing the home owner into foreclosure

The fact is that this law is effective immediately, and most distressed home owners are unaware of this option. When borrowers make their monthly payments to their mortgage servicers, the servicers keep a portion of the payment as their profit while sending the rest to the Wall Street investors who actually own the mortgage. The law mentioned above requires the servicers to act in the best interest of all their investors and obligates them to modify your loan if you can afford the negotiated modified loan terms - as well as the above mentioned.

when negotiating a loan modification with your mortgage lender, it is advisable to follow this four step process:

1. Make sure you are dealing with your lender's loss mitigation and/or work out department
2. Write a hardship letter demonstrating job loss, serious medical condition, balloon payment coming due, adjustable rate reset or some other financial calamity that will make it impossible for you to continue making your mortgage payments as scheduled. Unless you are in imminent danger of default as required by this new law, lenders are not likely to work with you
3. Send the lender your financial statements, employment records, tax returns and bank statements demonstrating how you would be able to afford the modified loan terms under your present financial circumstances
4. Send your lender a current appraisal of your home or some documentation on recent comparable sales in your neighborhood demonstrating the current value of your home.

The key is to demonstrate how the lender is likely to recover less money through foreclosure than they would by working with you in your proposed loan modification plan.

For a sample letter you can use during your renegotiation, Click Here: http://www.cmpsinstitute.org/pdf/SampleLoanModificationRequest.pdf

We know this is a tough market to be in for everyone; we're here to educate and assist in any way possible - especially with the situations you're a little rusty on or have never been through before.

We will all get through this - we refuse to leave anyone behind!