Loan modifications are helping millions of people save their homes from foreclosure. A modification is one of the most popular foreclosure options that borrowers are turning to if they want to keep their home, but are experiencing a financial hardship. The government has put pressure on loan servicers and lenders to work with borrowers to give them loan modifications to prevent borrowers from losing their homes to foreclosure and to help stabilize the housing industry by stopping more foreclosure from coming on the market. Over the past 21 months, the Obama Administration’s HAMP program has led to more than 3.5 million homeowners receiving help. Since April of 2009, more than 7.1 million homeowners have refinanced their homes. More than 3.5 million modifications were started between April 2009 and August 2010, triple the number of foreclosure completions that occurred during the same period. These included more than 1.3 million trial HAMP modifications. After nine months, almost 90% of the homeowners are still in their homes according to government figures.
Speak to Your Lender
The time to inquire about a loan modification is when you realize you are having trouble making your monthly payments. If you have not spoken to your lender about a loan modification, then now is a good time to do so. Lenders do want to work with you to find a solution for you to keep your home. They have so much inventory right now, they don’t want or need another foreclosure on their books. It costs them between $50,000-$75,000 per foreclosure so it’s cheaper for them to give you a modification. A modification is when the lender modifies the existing loan. They typically reduce your interest rate on a variable rate mortgage by at least 2% and extend your loan repayment term to as long as 40 years. The modification reduces your monthly payment to one that you can afford. If you can negotiate with your lender a principal reduction, then you are even in a better position. Most lenders resist this practice, but it never hurts to ask. All they can say is no. You should also negotiate that the arrearages are either forgiven or tacked on to the back end of your mortgage.
Hire a Modification Company or Real Estate Foreclosure Defense Attorney
Since most borrowers don’t know much about negotiating a loan modification, many hire a loan modification or real estate foreclosure defense attorney to help them with negotiations with their lender. Having someone who is experienced negotiating your modification gives you a better chance that your modification will get approved, and your lender will realize that you are serious about saving your home from foreclosure. The modification negotiator understands the process and knows where to send your paperwork so that it gets to the right person. Once the lender has assigned their negotiator to the case, then your representative will start negotiating favorable terms for your modification. An attorney can represent you in court if your lender has initiated foreclosure proceedings and will concentrate on legal defenses to fight the foreclosure. Once your modification has been approved, your lender will stop the foreclosure proceedings. Your representative will follow-up and make sure to keep you advised until your modification is processed so you don’t have to any more worry about losing your home.
If you are serious about saving your home and can demonstrate a financial hardship, have a steady income and sufficient funds to afford your new modified payment, then a loan modification may the best alternative for you to save your home from foreclosure. Talk to your lender before it is too late. Why risk losing your most valuable asset when there is foreclosure prevention help waiting for you? Act now and be proactive in pursuing a loan modification.