Loan Modifications 411

What is a Loan Modification?

Loan Modification- This term has been getting a lot of attention lately and rightfully so. With millions of homeowners stuck in toxic adjustable rate mortgages and no way to refinance out of them, loan modification may be the only way to assist struggling home owners.

This term is used when your lender modifies your current mortgage (keeping the same loan you have, only changes are made to the note) in order to work with you and make your mortgage more affordable. A loan modification will change one or more of the following: your interest rate, loan balance, delinquent fees owed and term of loan. In the past, this was only used when a borrower was delinquent but now we see it being used before someone is delinquent. This is one of the best methods to help people avoid foreclosure.

What can loan modification can do for you?

• Avoid Bankruptcy
• Reduce your monthly payments
• Change your loan without refinancing
• Bring your late mortgage payments current
• Stop foreclosure

These are just a few of the many ways we can help you and your family. We can give you a fresh start!

Why would my lender want to modify my loan?

Keep in mind lenders lose money when they foreclose on properties. First, there are the legal costs of the foreclosure process that the lender must incur. Then, bank owned properties will sell for less than market value, and they must pay a commission to a Realtor, closing costs, plus pay the costs of holding the property while they wait for a sale in a market that is depreciating. So therefore it is in the best interest of the lender to modify the loan to get it back to a performing status.

Will my lender modify my loan?

Probably yes, 99% of all "A" type lenders and 70% of sub-prime lenders (with high interest rates) will negotiate a loan modification where:

• most of the delinquent payments and foreclosure fees are either wiped out or added onto the back end of the loan.
• In most cases the interest rate will be reduced permanently.
• In some cases, the principal is also reduced

What are principal reductions?

A principal reduction is a reduction in the overall balance that is owed to the bank. This along with an interest rate reduction can significantly reduce the homeowner's monthly payments.

A property is upside down, or underwater, when the principal balance owed on the home is more than the house is worth. In this case, when the homeowner is also facing foreclosure, the homeowner has more leverage than they may realize against their lender. When you hire us, we will use that leverage upon that lender. In doing so, we can be successful in reducing the principal loan balance.

For example, if a homeowner owes $400,000 on their mortgage but in this current market the fair market value has reduced to $300,000. We can convince the lender to lower the loan amount to the $300,000 figure.

Interest Rate Reductions

One of our strategies is to negotiate an interest rate reduction with the lender on behalf of the homeowner. We will present the case the the lender that lowering the interest rate to current market rates or below will be in their best interest, Alternative to spending money on a foreclosure and losing money on a re-sale.

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Is Your Lender or Servicer Not Helping You or Being Abusive??

Lenders and servicers are very busy with desperate homeowners trying to save their homes from foreclosure. Unfortunately, they do not have the man power or the capabilities to save everyone.

Many people are simply getting lost in the system and suffering an unnecessary foreclosure when they could have worked it out with their lender.

However, when a lawyer is involved, it seems as if the calls start to get answered and the letters responded to. Often this can make the difference between saving your home and losing your home. 

With an attorney involved, you have an important ally in your corner to get you the mortgage help you need, FAST!

How can I save my credit?

Our goal is to get you a fresh new loan that is more affordable that the one you currently have. That gives you the twin benefits of not only saving your credit, but improving it. It will also allow you to stay in your home.