Due to the current state of our economy and the credit crisis spreading across the prime mortgage sector, many borrowers who were previously considered lower risks are now facing foreclosure. At the same time, properties held as collateral by the banks are continuing to lose market value. The bottom line is that foreclosure has become a costly option for lenders to pursue. The good news in all of this is that lenders have become more amenable to mortgage loan modifications rather than incur the costs, headache and hassles involved in the foreclosure process.
The Squeeze of the Times
When the foreclosure crisis first erupted and imposed a serious squeeze on the nation’s housing market, Washington bureaucrats encouraged the mortgage industry to offer mortgage loan modifications in lieu of foreclosure whenever possible. However, since there was no “official legislation” in place making loan modifications mandatory, lenders were less inclined to help those behind on their mortgages and avoid foreclosure. As time passed and the foreclosure crisis worsened, lenders changed their tune. They are now more willing to consider loan modification over foreclosure. Mortgage loan modification really helps both lenders and homeowners to come out ahead in the end.
How Mortgage Loan Modifications can Help
With a mortgage loan modification, it’s possible to refinance the debt and/or extend the term of your original loan, which will make your monthly payment more affordable. Loan modification also allows you to build your arrears (payments missed) into the new 30 year loan. With all the current lending laws and government assistance programs that are now available, mortgage loan modifications are a lot easier to come by.
Qualifying for a Mortgage loan Modification
In order to qualify for a loan modification the borrower must first prove there was a hardship or some sort of lender misconduct which caused their mortgage payments to fall behind. Income will also be used to determine mortgage loan modification qualification. A mortgage loan modification can stop foreclosure, but only if you act quickly and efficiently.
Hire a Professional Who Understands Mortgage Loan Modification
If at all possible, hire a qualified attorney that understands the mortgage loan modification process and who can negotiate on your behalf. It’s important that borrowers understand that attempting to get a loan modification doesn’t necessarily stop the foreclosure process from continuing. Until your loan statement clearly indicates that you are current on your mortgage payments or you have something in writing stating that your loan is current, the lender can continue the sale of your property.
Contacting Your Lender
The first step is contacting your lender to discuss if they’re open to a loan modification. If you want the lender to allow more affordable mortgage terms, you will first have to demonstrate that you are unable to repay the existing mortgage. At he same time, you will have to demonstrate an ability to repay a modified new loan. Borrowers looking for mortgage loan modification have a much higher chance of getting approved with good credit and provable steady income. If you are a homeowner facing foreclosure, it is definitely worth trying for a loan modification.
Leigh Brown, Charlotte NC Foreclosure Real Estate Expert
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