In the past, getting a loan modification was fairly simple. The banks were not overwhelmed with requests and when someone did need help, they had plenty of time to try and figure out a solution. Today things are much different; mortgage companies and banks have thousands of foreclosures to deal with and they all seem to be losing money and going out of business, because of the foreclosure crisis. What used to be a simple process is now one of the hardest ways to stop foreclosure.
When a lender agrees to do a modification, they are taking a big risk. They are offering you a chance to stop the foreclosure and get a fresh start, after they’ve spent money trying to foreclose on you. If you stop making your payments after the loan mod, they will have to start the process from the beginning and it will cost them even more money the second time around. This is why lenders rarely offer a mortgage modification as their first solution. In most cases, they do what’s called a workout plan. This gives you the opportunity to make several payment, for them to determine if you can truly afford the mortgage. The payments in a workout plan are higher than the modification payment would be, so if you can make those payments, they’ll feel comfortable offering the complete modification.
A mortgage modification is when the lender combines the total amount owed on your mortgage, including all the missed payments and fees and changes the terms of your mortgage to (basically) reflect a new mortgage. Sometimes they will re-amortize the loan, or lower the interest rate, or both. The end result is immediately stopping the foreclosure and new monthly payment.
Loss Mitigation is a term used when the repayment terms of your loan are negotiated with your lender. Many people seek professional negotiators to handle loss mitigation, because it can save a home owner ten’s of thousand’s of dollars over the life of the loan. However, loss mitigation is something you can do on your own, if you have the time and experience. Just as a successful negotiation with your lender can save your home, a bad negotiation, or revealing too much information, can virtually guarantee the loss of your home. It is imperative to understand what you are up against before you attempt to negotiate on your own.
A good loss mitigation company or negotiator will know exactly who to talk to at your bank and they will have specific experience with your lender. In some cases, like us, companies will have an established relationship that allows them to present complete packages and immediately get a mortgage modification approved. This is the type of experience you are looking for when you are facing foreclosure.
To get approved for a mortgage modification, you’ll need to present your lender with the correct information.
When information is presented incorrectly, in many cases, it will never make it to the desk of someone who can approve it. In many cases, home owners get turned down verbally and give up. This is a big mistake, because if you knew how to correctly present your case to the lender, you could have been approved. Knowing what information to provide and how to provide it is the biggest key to getting a mortgage modification or forbearance agreement.
If you need a mortgage modification, then your first step is to complete our evaluation form on the left. We’ll provide you with a lot more information and advice on how to best go about getting a workout plan or modification.