Do you know someone or have clients that are struggling with their current mortgage? Maybe their mortgage has adjusted to the point that they can simply no longer make the payment or if they are making the payment it is only because something else is not getting paid. Most of these individuals were placed into a bad loan and now are in a position where they can't refinance into a good loan.
It is my experience that the majority of these individuals simply stick their head in the sand and do nothing. They don't call the mortgage company to try to work things out. And for those who do call, they have often waited far too late or fail to follow through with getting the necessary information to the mortgage company to properly be considered for a loan modification.
I have assisted countless numbers of people who fall into this pattern. By the time most come to see me, there are very few options left save filing a Chapter 13 bankruptcy. But for those individuals that are in an adjustable rate "bad loan" bankruptcy can't really help them save their home because they can't afford the ongoing monthly mortgage payment, let alone the plan payment that would be necessary to bring them current within a five year chapter 13 plan.
Hopefully word is getting out that mortgage companies are more willing than ever to work with individuals to do a loan workout or loan modification. But even this can be overwhelming for many, as they continue to get the run-around by the mortgage company. I used to advise my clients to pursue loan modification on their own and to call me if they couldn't get it done. My rational was that there was nothing inherently difficult in the process and that clients could save themselves the money they would pay me by doing it themselves.
I have changed my approach on this, however, as virtually everyone of those clients I sent on to do it themselves returned with the same story that they couldn't get straight answers out of the mortgage companies and when they did get answers, they were getting denied.
In analyzing these situations, it became clear that my clients were consistently running into the same problems. They didn't understand how the process works and what the criteria of the mortgage companies were.
It is my hope of the next several days to provide my experiences so as to maybe assist people in understanding the loan modification process and what things they can do to increase their chances of successfully restructuring their loans to enable them to preserve their homes.
The first thing that homeowners should understand is what factors the mortgage companies will be looking at. These factors are primarily as follows:
1. What is the nature of the hardship causing their mortgage problems?
2. The homeowners ability to make the current monthly mortgage amount as well as their ability to make any reduced payment amount;
3. What does the home owner's future financial situation look like?
4. How much is owed on the mortgage?
5. How much equity exists in the property?
6. What course of action would best serve the interests of the mortgage company (i.e., would the mortgage company be better off foreclosing as opposed to modifying the loan)?
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