Loan Modification Companies Are There Any Good Ones

With the economy the way it is, many families are struggling to keep their homes. One good way to afford your mortgage payment is to get your loan modified. Loan modification companies are a good way to do this, if you choose the right one.

Why choose a loan modification company? Well, first of all, they won't get confused with the terminology your bank uses when talking to them. They are on the same page as your lender and know what needs to be done to get you approved. They also know what a good loan modification is and what a bad one is. Lenders aren't in the business of modifying everyones loans right off the bat and when they offer you one, it usually isn't as good as it can be. A company will know when to reject the offer and when to take it. And finally, you won't have to spend hours on the phone every day trying to get things accomplished with your lender. The company will handle this for you, because you have better things to do with your time, right?

So, what makes a good loan modification company? Well, there are many things to look for, but I'll tell you about one company that has some pretty amazing programs right now. They have all the bases covered...

First of all, they can do "instant" loan modifications with several major lenders. These can be fully completed in a week or less. The lenders include Bank of America, Countrywide, EMC, Wells Fargo and more. If you have one of these lenders, you should contact them for sure. They will gather some quick information, get authorization to speak to your lender and call them up. They will know right away if you are approved, what your interest rate will be and what your payment will be. They can verify this with you as well. So, if you like what you see, you can move forward and get the loan modification done. If not, you can look for an alternative (such as a short sale). There are no risks involved with this program, unlike other companies that charge upfront fees and take months to get you any information.

If you don't have one of these lenders, there are other programs available as well. This company has experts on the HAM program (the Obama mortgage plan) and know how to get you qualified if you are within the "window" or close to it. With this program, you can reduce your monthly payments (taxes included) to 31% of your net monthly income. This is done by reducing the interest rate (as low as 2%), extending the terms (30 year loan to 40 years) and/or reducing the principal. It goes in that order until the cap is reached, so usually lowering the interest rate and extending the terms if necessary will get it there, balance reductions are rare. The whole point is to lower your payments so you can afford to stay in your home, so I wouldn't worry too much about reducing your balance! A 2% rate is amazing.

Avoid Loan Modification Scams

What is a Loan Modification? That is where you and your lender agree to modify one or more of the terms of your home loan. The goal of a Loan Modification is to help you keep your home and to give you a real, meaningful, sustainable, and long-term adjustment to your current home loan that works for your financial situation.

With so many thousands of homeowners having trouble paying their mortgages, Loan Modification is one of the best options in order to lower their monthly payment and avoid foreclosure.

Avoid Paying Upfront Fees - If you are behind in your mortgage payments, you may be contacted by individuals or companies that will offer to help you work out a loan modification with your lender or provide other services to you in order to help you prevent a foreclosure on your home.

What are loan modification scams? Essentially it's when a modification company offers their services to help get your application approved, but for an up-front fee. After the fee, they promise to work on your case, but what is their motivation of getting an approved loan modification when they already have your money. In most cases they disappear after that. But sometimes they don't disappear, a portion of them give you follow up calls to tell you the "status" of your application, or to request more money to move the application along.

Avoiding Loan Modification Scams

A. Do It Yourself - There are DIY guides available that will give you the necessary knowledge to handle your own Loan Modification, but you must also have the time and patience. You can contact your mortgage servicer and/or lender directly and request a Loan Modification that works for you and your lender. Be persistent! - call back many times. Document all communications with your lender, regarding time, date, what was discussed, etc. Remember that when you call a Lender, you are calling a debt collector, and anything you say to the Lender can be used to collect that debt. If you have no experience negotiating with a debt collector, it is much wiser to let a professional handle it.

B. Why Not Use An Attorney? 1) Attorneys charge upfront fees, usually with a minimum fee of $3000.00 2) Even if the Attorney is unsuccessful, they will keep the Clients money. 3) Most Attorneys have no experience dealing with a mortgage Lender.

C. Other Free and Safe Options -- If you don't believe you can negotiate a Loan Modification yourself, or if you do not want to, there are safe options available to you.

1. The U.S. Department of Housing and Urban Development ("HUD") offers Foreclosure Avoidance Counseling. Go to HUD's web site at www.hud.gov, or call 800-569-4287, to find counselors. Government agencies, such as HUD, offers information to homeowners with their mortgages.

2. HOPE NOW Alliance - this is a cooperative effort of home loan counselors and lenders, and it consists of HUD intermediaries. Go to the HOPE NOW web site at www.hopenow.com or call 888-995-HOPE.

3. Use a Loan Modification company that offers an "No Up Front Fee Loan Modification program. Pay only if they get results. Find one that analyzes your whole financial situation, not just a Loan Modification, but also a Loan Modification Repayment Plan, Forbearance Modification, Short Refinance Modification, and Property Tax Modification. Before paying the fee, make sure that your lender has approved the Loan Modification plan, not just an approval by the Loan Modification company.

Loan Modification - What you need to know

With the housing market experiencing the most pervasive slump since the Great Depression and the number of home foreclosures on the rise, mortgage loan modifications have been getting a lot of attention lately- especially after the passage of President Obama's Housing Stimulus Plan. A mortgage loan modification can bring some welcome relief to those who qualify.

But unfortunately, many homeowners will not be eligible for this program.

Here are a few things you should know about loan modifications:


What is a Loan Modification?

A mortgage loan modification, also known as a loan workout, occurs when a lender agrees to change the terms of a mortgage in response to a borrower's long-term inability to repay the loan. These changes may be permanent or temporary and generally involve a reduction in the mortgage interest rate (APR), a loan term extension, and a change in monthly payments. In some cases, lenders may even agree to allow the borrower to skip payments (and add them to the end of the loan) or reduce the total amount of principal due on the loan.

In short, the loan modification is designed to make the mortgage more affordable for the borrower so that foreclosure and bankruptcy can be avoided and the individual's credit rating can be preserved. In fact the ultimate goal of a loan modification plan is to help borrowers reduce their monthly mortgage payments to 31% of their gross income.

Why Would Lenders and Servicers Agree To Do a Loan Modification?

Banks and commercial lenders are generally not known for their acts of charity and goodwill towards their customers, so why would they agree to do a mortgage loan modification? The answer is actually quite simple: lenders stand to lose more on a foreclosure versus a loan modification. If a borrower stops making payments and collection attempts have failed, then a lender can either try to repossess the property, write off the loss, or wait till the person declares bankruptcy- in which case the lender will receive virtually nothing. None of these options are so appealing.

Moreover, under President Obama's Housing Stimulus Plan, even mortgage servicers will benefit from a mortgage loan workout. Servicers will get $1,000 for each eligible modification they make, and another $1,000 a year for three years as long as the homeowner remains current on payments.

Who is Eligible for a Loan Modification?

According to President Obama's Housing Stimulus Plan, several situations may qualify an individual to receive a loan modification:

- Those with a high combined mortgage debt compared to income

- Those who are underwater- i.e. they have a combined mortgage balance higher than the current market value of their homes

- Those who are in imminent risk for default

Lenders and servicers will typically be focused on the borrower's ability to afford the terms of the modified loan. Some determining factors that a lender will consider include:

- The nature of the borrower's financial difficulty

- The borrower's ability to pay the modified loan

- The amount owed on the loan

- The amount of equity the borrower has in the property

In short, a loan modification is a useful tool that can help many consumers struggling to stay current on their mortgage payments. But not everyone will be able to benefit from it.