Loan modification is becoming more and more common for homeowners who are behind on payments or facing foreclosure. The American government has taken a very active role in attempting to stabilize the housing market. The Obama administration has encouraged banks and lenders to be as accommodating as ever to work with struggling borrowers who are close to or already have defaulted on mortgages.
Banks and mortgage companies are finding that it may be more profitable to work with homeowners who are behind on payments if they can give them some time with which to recover. Typically the bank does not want to own actual real estate, but would prefer to collect monthly mortgage payments with interest charged to the borrower. With the amount of bank-owned properties now being worked through the housing market, many borrowers are being given a bit more leeway in hopes of restructuring their loan balance with lenders.
Be very careful if you choose to use a loan modification company that takes a fee up front to negotiate your loan modification for you. They cannot guarantee a successful modification and can end up costing you another month’s mortgage payment in exchange for false hope. The best of these companies have done the modification countless times and will actually try to help you in earnest without guarantee. The worst are scams that take your money with a cursory attempt to help you.
The first step is to contact your mortgage company. There are thousands of delinquent borrowers who never pick up the phone and talk to their lender before heading in to foreclosure. If you are sinking it is up to you to call the customer service number. Identify yourself and ask to speak with the loss mitigation department. Do not spend too much time with the customer service representative – they cannot help you – save your breath and ask to be transferred to the loss mitigation department. Before you are transferred ask for the direct dial number to the department. This will save you a step in your subsequent follow up phone calls.
When you get to the loss mitigation department ask who you are speaking to. Get their full name if possible and position title. Explain to the person that you have an adjustable rate mortgage and are unable to make the higher monthly payments, if that is the case. You are (or may become) delinquent on your loan and need to modify it or there is a serious chance that you’ll fall further behind and/or go in to foreclosure.
They should be able to walk you through your available options if any – assuming there are alternatives to letting the property or loan go delinquent or through the foreclosure process. If there is an alternative to letting the property go through foreclosure and impacting your credit for the future, it is probably in your best interest to look into whatever options might be available.