How Obtaining A Mortgage Modification Helps People Avoid A Foreclosure Auction

By Author: Nick Adama
Total Articles: 197
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Acquiring a debt modification is one way that a property owner can avoid a sheriff's sale. All consumers do not meet requirements and not all lenders are participating. But, if you are having trouble paying your mortgage, it is worth your time to call your lender and find out what options they have in place. You may not always get the answer you are looking for, but once you get the right person on the phone, you will greatly increase your chances of saving your home and stop an eviction.

A debt modification can take many shapes. It is a permanent alteration in the original arrangement made between you and your lender. In other words, it's not a temporary fix, like a workout plan or forbearance agreement; it's a permanent plan that will continue for the life of the debt. But you should know that most bankers will not approve a loan modification if a temporary fix would also be an option. When discussing a loan modification, you will need to represent your financial position in the most straight forward and honest way. This is a good reason to hire a professional to negotiate with their mortgage holder, rather ...
... than attempting such an important task on their own.

The points that can be changed include the interest rate, the length of the mortgage, the size of the monthly payments and the amount of the principal, but in only infrequently is the principal reduced. Usually, adjustments are made that increase the total debt in order to cover any delinquent amount or other charges that could result in a lien being placed on the residence. If a total loan reduction is required to make the payments manageable, and it can be justified by a market value that has declined since the purchase, then an adjustment can be discussed. In every case of a modification, we recommend acquiring a BPO (Broker Price Opinion) or a Property Valuation to justify the current value to your mortgage servicer. A full appraisal is costly and generally not necessary. Both items mentioned above can be purchased for around $100 and should adequately collaborate the value to your banker.

Banks all have waiting periods. Some lenders seem to take longer than others to respond to a consumer. Bank of America, for example, has been mentioned in hundreds of accusations to the Florida state attorney general for dragging out the process when contacted by homeowners. It's crucial to not just sit back and wait for your lender to take action. You need to be assertive by checking up on them regularly and making sure you have provided all the documents they requested.

Typically, a mortgage company will offer the property owner a "trial period". If you are offered a trial, you will be asked to make your payments according to the scheduled time for three months consecutively. Some mortgage servicers allow you to make the altered, reduced payment. Others expect your current payment, whatever that may be. Many cases we see, start with a workout plan and then the loan is modified after the first three installments. A workout plan is when you make your regular payment, plus an additional sum that is applied to the over due amount. This possible plan requires you to make three payments adjusted up until the loan is modified.

A major problem with agreeing to this type of plan is that you are placing your confidence in your lender to actually alter your loan three months later. Past experiences demonstrate lenders infrequently follow through; and will say almost anything to try and collect cash owed to them. Having confidence they will follow through is never a good idea; so demand that you get everything in writing and follow any plans you've agreed to. Make sure you don't agree to a modification, workout plan, or repayment plan that is not in your budget.

Overall, a loan modification is most likely the best choice you may haveto keep your residence and stop foreclosure, so don't waste any time and take charge today. Your first step is to call your lender and inquire about possible options to stop foreclosure. They should have a standard loss mitigation package for you to complete and return to them. If they don't reply favorably, or worse yet, don't respond at all, then you may need to hire a professional to negotiate for you.

No matter what happens, you'll know you did everything possible to fight eviction.
Nick publishes articles for the ForeclosureFish site. These articles provide information to families facing the loss of a home, describing a number of methods they can use to stop foreclosure. The site details numerous options, including mortgage modification, foreclosure refinancing, deed in lieu of foreclosure, filing bankruptcy, and more. Visit the site to find out more about how foreclosure works: http://www.foreclosurefish.com/