A Loan Modification Can Keep You In Your Home And Avoid Foreclosure

A loan modification is an approach to modifying an existing loan to obtain a more affordable monthly payment. It is a process that a lender and a homeowner, and sometimes a third party, go through to make changes in the current mortgage. The concept behind this process is to ensure that the homeowner can make their monthly payments normally and on time. People who go through this process are often those who have defaulted and face foreclosure, have an adjustable rate mortgage (ARM), or have severe negative equity.

Lawyers. Homeowners looking for a mortgage modification due to default on their mortgage are best advised to seek out a professional. You can either select a lawyer or a company that specializes in modifications. In some cases a lawyer is more expensive, but they will generally check your loan for any errors and, if errors are found, can offer advice on restructuring the mortgage.

Companies. An advantage of using a loan modification company is that they are often less expensive than a lawyer. Some companies actually have a lawyer on staff to handle various legal issues that arise during the process of modifying the loan. It is best to research different companies to weigh the cost and success rates, as well as obtaining references.

Selection. Different companies have different reputations, just like anything else, so make sure you do your homework on a company that you are considering. Having a third party handle the loan modification process saves you the time and inconvenience of negotiating with the lender. When evaluating a company, ask plenty of questions and perform a thorough due diligence on the company's history, experience, and specific services offered. Although price is a consideration, there is considerable value in dealing with a service that is experienced and produces a favorable result - the desired changes to your mortgage.

If you want to accomplish a loan modification on your own, you should read more about the process. The next areas to consider are: how to structure a hardship letter, how to negotiate with the bank, and your bank's specific guidelines.

By: Mark Winfield

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