President Obama's plan to help millions of Americans by encouraging banks to look into modifying terms of existing mortgages so that good intentioned people who are feeling a financial pinch can remain in their homes and continue paying a lower more affordable payment.
This is logical and seems to be the best solution for everyone. The bank continues to have a mortgage that they are collecting interest on. Even if it is less interest than originally agreed upon its still better than no interest and another home on their books. The home owner is happy because, those who request a modification are typically proud, trustworthy people who are dedicated to paying their mortgages and who love their home.
The new administration has placed some specific programs and guidelines to try to standardize the modification process as best they can, but remember, banks and the investors who backed your mortgage are corporations and, at the end of the day, it all comes down to you and your mortgage.
So, is now the time to call your lender? Yes, if you have suffered a financial hardship, and have done your research on how to successfully prepare your request. Here are some tips:
There are over 4 million loans that are late in America. This is the biggest reason that negotiations can take months. You are in line with millions of others all calling the same number and asking for the same thing. This is a crisis and there are no tricks to getting things done other than knowledge and persistence.
- Most lenders will immediately tell you that you don't qualify for a modification if you are current on your payments (a whole other topic) however, persistence has proven to payoff even for those who don't miss a payment.
- You have several options. You can negotiate on your own, hire a third party to negotiate, or hire an attorney. You can educate yourself with "How To" books and courses for less than $100 or you can spend $1500-$6000 or more for someone else to negotiate on your behalf.
- The process could take months. Patience pays off, but it will take months longer than you think.
- Any time you attempt to bring logic into the process you will become frustrated. Stick to the plan and try your best to keep your emotions in check.
If you have found yourself in a position where your mortgage payments have or will become unaffordable, the first step in preventing foreclosure should be a request for a modification with your lender. Even if the outcome results in requiring to sell your home as a Short Sale, the fact that you attempted to save your home will bode well in the lenders eyes and you will know that you chose the most ethical and prudent path possible.
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Rebecca Austin is a consumer advocate who consults home owners in financial hardship of their options regarding loan modification, short sale, financial education, credit improvement and debt consolidation. Rebecca is a licensed Real Estate Broker and author of Work It Out, a tactical guide to negotiating more affordable payments with your lender.
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