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Home Mortgage Loan Modification

If you are behind on your home mortgage you may be eligible for a "home loan mortgage modification". The following information describes the home loan modification process and attempts to answer commonly asked questions:

Introduction
FAQ
The Issues
Legal Services
Scams

I. Introduction:

There are possible solutions in programs available to eligible individuals with financial hardships. However, the definition of "eligible" is defined differently by each mortgage lender and the entire arena of mortgage loan modification law is a complicated and evolving subject. Some homeowners have met with some success in this area and many have not. Even those represented by attorneys may have a difficult time.

II. Frequently Asked Questions:

What exactly is loan modification? Mortgage modification (sometimes called "mortgage mod" or "loan mod") may take several forms. If you are unable to make your payments, your attorney's job is to work with your mortgage lender and or the appropriate federal program to create a reasonable workout plan. Such a plan might include:

rate reduction (lowering the interest rate),
negotiating a new mortgage, principle reduction (lowering the principle balance) of the mortgage loan,
designing a payment plan for past due payments,
forgiving past due payments,
or a combination of those measures.

I can't make my loan payments - am I eligible for mortgage modification? If you have experienced financial hardship due to circumstances beyond your control, such as losing a job, medical expenses, divorce, unmanageable tax burdens or your ex's failure to pay child support, you may be eligible for a mortgage modification. Perhaps your income decreased while your adjustable rate mortgage (ARM) interest rate soared. Should I wait to request a modification until I miss a mortgage payment? No. Your position may be stronger if you begin negotiating before your mortgage lender begins foreclosure proceedings or records missed payments. It will show you are making a good faith attempt to negotiate a reasonable loan workout plan. Although you can do this process on your own, phone calls or letters from an attorney may carry more weight with lenders. How does a lawyer stop foreclosure? Your attorney can help evaluate your situation and determine which foreclosure defense strategies apply to your case. He/She can then contact your mortgage lender and begin negotiations on your behalf. If you and the lender reach a reasonable loan workout agreement, your attorney will review all the necessary documents, seeing that your interests are protected at every stage of the case. You may wonder, "Do I need a lawyer or can I do this myself?" Yes, you can pursue negotiations directly with your lender and some home owners have been successful in their attempts. However, if an attorney makes the first call or writes the first letter on your behalf, it is clear to the lender that you know your rights and may have a good case. If the lender made mistakes or took actions that constituted mortgage fraud, your foreclosure defense may be stronger. Your attorney can help you understand the issues and know your rights.

III. Understanding the Issues

The fact is, the banks may not want to take your house back. They have too many homes already. They would rather you live there, keep the house well maintained, and pay a significant amount of the mortgage. On the other hand based on how your loan documents are structured sometimes banks often can make more profit if there is a foreclosure.

This understanding and hope for success is qualified by the fact that even with an attorney there is no way to guarantee the outcome and you must undertake the loan modification process realizing that you may not succeed despite everyone's best efforts.

Loan modifications are not new, but are playing a more significant role in this economy. USA Today recently reported that more than 11.3 million homes are worth less than the mortgages on them and that home foreclosures are at all time highs. Help may be on the way with revised federal programs as well as major mortgage companies and banks agreeing under pressure from the federal government to voluntarily participate in "hardship" home loan modification programs. These efforts by the government and the private financial sector are all aimed at stemming the tide of foreclosures and giving homeowners dealing with financial hardships a way to stay in their homes and avoid foreclosure.

IV. Legal Services

There are costs and fees associated with a home loan modification that you will be responsible for. You also need to qualify for the hardship program which varies from lender to lender. However, noting that your home is your most important asset the goal of your attorney is to help you modify your home mortgage and to minimize any impact to your credit rating.

V. Be Aware of Scams and Only Deal with Qualified Professionals Who you Trust

As a note of caution it is very important to be aware of scams promising to help you save your home. If you're falling behind in your mortgage, others may know it too including con artists and scam artists. They know people in these situations are vulnerable and often desperate. Mortgage companies publish foreclosure notices and private firms compile and sell lists. If someone offers to negotiate a loan modification for you or to delay foreclosure for a fee, carefully check their credentials, reputation and experience and watch out for the scams such as:

Foreclosure rescue and refinance fraud
Fake government modification programs
Leaseback/rent to buy schemes
Debt elimination scams

Introduction | FAQ | The Issues | Legal Services | Scams

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