How To Negotiate A Loan Modification Agreement

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If you are falling behind on your monthly mortgage payments a loan modification agreement may be just what you need to get yourself back on track and avoid foreclosure.  A loan modification agreement will modify the terms of your mortgage loan by lowering the interest rate, extending the length of the loan, or providing some form of principal forbearance or forgiveness.  The goal is to make your monthly payments more affordable.

Loan modification agreements have become more and more common.  Foreclosures are very costly for lenders and the federal government is also strongly encouraging lenders to offer loan modification agreements to help stem the tide of foreclosures which have swept the country.  So bear this in mind when attempting to qualify for a loan modification agreement.  It is in everyone's best interest for you to stay in your home and make monthly payments rather than you losing your house to foreclosure.

To successfully negotiate a loan modification agreement you will need to become familiar with all aspects of the loan modification process.  You will need to provide your lender with the necessary documentation to show your income and expenses, as well as present a persuasive case to show why you are a good candidate for a loan modification.

You can either hire a loan modification company to help you prepare your case and negotiate with your lender on your behalf, or you can contact your lender directly and negotiate your own loan modification agreement.  The advantage to hiring a loan modification company to help you is that you will have a specialist preparing the necessary documentation and negotiating on your behalf.  The disadvantage is that it can be quite expensive and may require a substantial upfront fee.   You also will need to thoroughly investigate any company you are considering to make sure they possess the necessary licenses, are in compliance with mortgage laws, and have the appropriate experience to successfully negotiate on your behalf. 

The advantage to negotiating your own loan modification agreement is that you will save on the costs of hiring a specialist.  However, you will then need to become thoroughly familiar with the entire loan modification process yourself and must be able to successfully present your case and provide all the necessary financial documentation that your lender requires.

Whether you hire a firm to help you or decide to negotiate a loan modification agreement on your own, the time, effort and money spent are well worth it.  A loan modification agreement can really help you get financially back on track and save you from losing your home.

Comments (1)

Loan Mod Help

What do you think about a do it yourself loan modification? Many people are interested in Obama's new Foreclosure Prevention Program, so I've taken the time to list out the 9 steps to doing a diy loan mod. Here are 4 sample steps, see the remaining steps here:

#1 Create a Journal: Use this to take notes on all your conversations, emails and faxes that you send back and forth between you and your lender. You can take notes online in Microsoft Word or offline in a spiral notebook. Either way, you'll be very happy you did this, if you get 1/2 way through the process and find that you need a loan modification lawyer to help you out.

#2 Do Your Homework: Before you start sending off letters to your lender, it pays to take a couple hours and read stories about other people in your same situation and find out how they asked their lender for a loan modification. A great place to get insight and learn more are in online forums. runs a great forum with lots of useful information. They have sections for almost every lender - dive in their to start and get names and phone numbers so you know who to contact.

#3 Write a Hardship Letter: It pays to take the time and write an excellent hardship letter that takes into account the hardships you've endured that have caused you to seek a loan modification. Make this letter concise - not overly wordy and get it proofread by at least 2 other people.

#4 Contact Your Lender: After you've gone through steps 1-3 you're ready to start making contact with your lender. Give them a call and find out the proper address for you to send in your hardship letter. After you send your letter in, you'll need to call the bank and find out if they got it and how long it's going to take for them to get back to you. Stay on top of the process - you are the driver and need to keep pushing things forward, the lender might try to stall so keep momentum moving forward.


Feb 23, 2009 11:22 AM