Loan Modification Options

Are you facing foreclosure? Did you get laid off, and the payments are too much handle? There are some options you may want to explore before you "give up".

First, call your lenders and ask what options they may have. There is a chance they may drop the interest for a year, to get you on track to keep you in the property. If that doesn't work, try a "short sale", which means selling your home at the market value, which is lower than what you owe the lender. The lender needs to "approve it", and there could be requirements to sign a personal deficiency judgment prior to the bank approving a short sale. This still keeps you from showing a foreclosure on your credit.

Some myths on loan modifications:
1. "The banks want my house." No, they don't. They have piles of properties that could potentially come back to them, and they are not in the business of owning property, just financing them. They make money when you make payments. When payments stop, not only do they NOT make money, they incur legal fees, possible rehabing, and then Realtor fees of selling it, at a loss.

2. "My credit is bad, I cannot qualify" When lenders do loan modification, you do not need to "requalify", they simply change the terms and perhaps reduce the balance of a loan you already have. You don't "close" again, therefore, no qualifying, no closing costs, etc. A successful loan modification will actually improve you credit score over time, allowing a homeowner to make payments, keep current, and stay out of foreclosure.

3. "I haven't missed any payments" Some banks/lenders would rather talk with you BEFORE you get behind in payments. Some do need to wait until you are late on 1 or more payments. Lending regulations have been changing severely in the last few months to work with the current credit/housing issues facing many homeowners today. Your best bet is to call your lending institution at the onset of a layoff, etc. and discuss all options you may have.

4. "I would be better off walking away or filing bankruptcy" Both of these options seriously affect your long term credit. When a foreclosure is on your credit history, banks view that as a serious credit risk down the road. Especially, when you want to buy another home. Again, personal deficient judgments can be filed against you, even if you allow your home to go into foreclosure.

5. "Its too late, already have received foreclosure notice" UNTRUE. Banks/lenders today are delaying this sale date to allow current homeowners to get current, talk about options of reducing interest rates/payments, and would rather KEEP you in the home. Again, short sale options are available also. After the sale date, banks/lenders incur more legal fees, and usually sell at a reduced price at that point.

If you have further questions, please contact me, or I can give you other options available to KEEP you in your property.


www.JoanCox.com