What Is Loan Modification? And Getting A Loan Modification!-00-1153

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The most desirable solution to mortgage troubles - assuming you tried to refinance and can't - is to enter a loan modification program. This is becoming an increasingly prevalent way for thousands of homeowners to overcome mortgage difficulties in an unforgiving market.

Ways your loan can be modified.

1. What terms a lender will agree to largely depends on your ability to pay and what would make the most economical sense for both parties.

2. Adding the delinquent balance to the loan. Rather than require payment up front, the lender may choose to add the balance owed to the new loan terms ensuring you will eventually pay it back.

3. Reduce the interest rate. You'll need to prove that a rate reduction can positively affect your situation and allow you to resume making timely payments.

4. Extending the years due. By adding years to the loan, the lender is able to reduce the monthly payment knowing that they will recover the amount later on.

5. Reduce the balance owed. Under some circumstances, the lender may elect to reduce the balance of the loan. To do so, they'll ...
... want to be absolutely sure you will be able to make the new payments.

The importance of doing it right.

While it is possible to negotiate directly with your lender, it is generally not recommended. There are many pitfalls that can cause your modification attempts to go awry. A professional loss mitigation specialist can help you navigate through the process and ensure that you do everything right.

The reason it's so important to strictly follow the lender's process is that they need to make a sound business decision. As such, they are going to review everything about your financial situation and whether or not modifying the loan will actually result in you successfully making payments in the future. If something is done wrong, it can kill your chances. We know just what the lender is looking for and the process you need to follow.

Loan modification mistakes to avoid.

Each loan modification must be carefully reviewed and faces severe scrutiny. It's important to avoid mistakes. That said, what are some critical pitfalls to avoid?

1. Improperly documenting financial situation. You need to consider every potential expense and be up front and honest about your debts and liabilities.

2. Trying to do it yourself. This one is easy to avoid. Unless you are clearly comfortable with the process, you'd be wise to pick up the phone and call a loss mitigation specialist.

3. Not knowing what to do if the modification fails.There are other programs that offer better alternatives to foreclosure. If loan modification fails, we'll know what to do next.

4. Submitting an incomplete package. Our process ensures you will not miss a step and make critical mistakes.

5. Poorly crafted hardship letter. Your hardship letter is an opportunity to explain to the lender why you are experiencing difficulties and can go a long way toward convincing a lender that you are a good candidate for modification.

6. Talking to the wrong department. If you call your lender, there's a good chance you'll have a hard time connecting with the right department. Often, lenders route delinquent accounts to collections who are only interested in getting your full amount due. These are not the people to talk to and will only frustrate you into thinking you are out of options.

So what is it that you'll need?

There are many different forms that you'll need to fill out. You can get those directly from our website when you apply for loss mitigation assistance. Among these forms is an application, a financial analysis worksheet and a hardship letter.

In addition to the forms, you will need to gather various documents such as W2s, bank statements, recent pay stubs and other related information. We'll make sure you have a complete checklist among your forms so you can keep track of everything you need to do.

Why a loan modification is best left to a professional loss mitigation specialist.

Every mortgage lender has a loss mitigation department. If you so choose, you may contact them and directly negotiate a program to save your home. That being the case, why should you use a professional loss mitigation professional like American Mitigation Group? Here are four reasons that show why doing it on your own is not worth the risk.

1. Each lender has different policies and approaches.

Some lenders will work with you, some won't. The process with one lender can be very different from the next. Perhaps you think you understand everything you need to do, only to find out that your specific lender has different guidelines. What happens when you take the wrong actions? It could cost you your chance at successfully negotiating new loan terms.

2. Lenders are not going to make this easy.

A lender is already leery of your ability to pay your mortgage because you have missed payments. They are going to be detail-oriented when considering your application for a loan modification and will want hard proof that you will be able to handle the new terms. In other words, you'll need to dot each ‘i' and cross every ‘t'. We have developed forms that make sure you cover every part of the process and don't miss a single thing. Can you say that in conducting your own negotiations that you are confident you have done everything the lender requires?

3. The negotiation takes some expertise.

Say you were having car troubles and couldn't get your vehicle to start. Would you dive in to the engine yourself and fix the problem? Probably not - more likely, you'd take it to a mechanic who is trained to fix such problems. We all have our niches of expertise and loan modification is no different. There are subtle tricks and issues that can have a huge effect on your loss mitigation success. Having worked with lenders for so many years, we aren't going to get tripped up by a lender during the process. Rather, we will be able to smoothly maneuver through the process and avoid critical mistakes that could cost you dearly.

4. Time is critical and none of us have enough to spare.

In case you somehow missed it, there are only 24 hours in each day. Between work, family, social responsibilities and everything else life throws at us, do you have the time required to accomplish a loan modification? Probably not. There's no getting around it, you will have to spend some time figuring out your financial picture and discussing your situation with us. Otherwise, you can leave the rest to us. We'll worry about lender negotiations. We'll worry about staying on top of the process. While you're busy living the other aspects of your life, we'll make sure your home stays, well, yours.

Are you a loan modification candidate?

Are you wondering if you might be a candidate for loan modification? Many homeowners - and by many, we mean thousands if not millions - are finding that a loan modification is the right solution for a failing mortgage. How do you know if you should pursue a loan modification?

1. Tried to refinance but got turned down. Many homeowners with adjustable rate mortgages are trying to refinance but simply can't qualify under stricter lender guidelines. When the housing market began to decline and lenders were forced to cut back or even close the doors altogether, it became much harder to get a loan. As such, homeowners aren't getting the help they need. Loan modification, however, is proving a viable way to work out an agreement when refinancing isn't possible.

2. Suffered a hardship. Hey, life happens. Sometimes, there's just nothing you can do. In this tough market, people are getting laid off from their jobs and have no means to pay their monthly mortgage. Others are dealing with the issues that pop up throughout life. Family illness, accidents that cause injuries, a decline in income and unexpected events are all legitimate reasons for falling behind on a mortgage that would otherwise be getting paid on time. Lenders are pretty open to workouts for hardships, especially when you show an ability to pay in the future. You'll need a hardship letter and we can help you put one together.

3. Home value has dropped. With a declining market, many homeowners end up owing more than the home is actually worth. In many cases, loan modification may not be an option when you get upside down on your home loan. You may be better off with a short sale. We can help you determine which program is better for your situation.

4. Simply can't keep up with the mortgage. As the economy and individual markets suffer, many people are seeing once stable and predicatable income decline to a point that they can't afford their home any longer. It's possible a loan modification agreement can be reached that would bring payments to a more affordable level. This is an especially attractive possibility if you can show your income will again rise to previous levels.

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