Loan Modification More Real Then Before

By
Services for Real Estate Pros with Real Estate Consultants

According to the Hope Now alliance of lenders there are an approximately 2.2 million home owners that are more than 60 days late on their mortgage payments, and one in six owe more than their home is worth. Is there anything these borrowers can do to save their home? Many have been under the assumption that they have to either lose their home to foreclosure (the legal process that entitles a lender to assume ownership of a property which a borrower has defaulted) or sell it in a short sale (the property is sold at a reduced cost and the debtor agree to accept partial payment as payment in full). However this is not the case. In reality there are a number of options that are available to borrowers largely due to the economic crisis that is affecting everyone, including large financial institutions. The options available to borrowers today would not have been considered three years ago. Nevertheless, a number of these options offered by the bank are not done still with borrowers' best interest at heart. For example, forbearance, a formal written agreement between the lender and borrower that allows loan payments to be paused for a period of time is offered. This may sound like a good idea without considering the ramifications. First, any missed payments will be tacked onto the principal balance, and once that period of forbearance is up, borrowers will have larger payments to make; this would not be helpful to someone who has lost their job and is still unemployed at the end of the forbearance period. Deed-in-lieu is a another option by where a borrower conveys all interest in a real property to the lender to satisfy a loan that is in default or to avoid foreclosure. This may be difficult for borrowers to come up with, especially if they are unable to make their monthly mortgage payments as is.

The option that lenders are less inclined to offer is a loan modification, even though there have been a number of government programs implemented just for that. The loan modification process prevents any foreclosure during the negotiations. There are a number of different options that fall under loan modification, the most common being a decrease in the interest rate, changing the interest rate from adjustable to a fixed lower interest rate and extending the amelioration period (period of time one has to pay back their loan).The problem people are facing when dealing with their banks is they are not informed about what is available to them, and they take this first thing offered to them. Borrowers in this situation have two options. First, they can hire a loan modification company that will ask them to spend what little money they have left to cover the fees. There are never any guarantees, so people risk losing their last mortgage payment to a company that really does not have the borrowers' best interest at heart. Second option, is to be spend a fraction of the cost of loan modification companies and do it on their own. Your Basic Guide to Do-it-Yourself Loan Modification not only puts you in the know of what a loan modification is and how it works, it also educates you on the financial jargon your lender is likely to throw your way. This manual provides step by step instructions on how to proceed and what is required of you, the borrower. There are also helpful tips on how to negotiate with your lender. A final note: No one wants to save your home more than you do, so do what you can to save it, at a low cost.

 

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