In the absence of an effective Loan Modification – where the payments and/or principal balance of a homeowner’s mortgage are adjusted downward – owners are being forced to leave their homes by the thousands here locally and by the millions nationally due to borrowers inability to make the payments!
What are the chances a mortgage company would modify the terms of a borrower’s home mortgage? “Slim to none,” many homeowners say. Some owners have tried and describe the process as a “Comedy of Errors”, filled with red tape and without results.
Even if the average homeowner has the time, patience and is fortunate enough to get in touch with a real person on the other end of the mortgage company’s automated phone system, statistics show they have a very limited chance of obtaining a successful workout arrangement, called a “Loan Modification”.
Why is this so? Simply put, loan modifications are difficult to obtain; and if obtained, they are not easily retained. Allow me to explain.
The Odds are Against the Borrower
A homeowner seeking loan modification must meet some pretty strict guidelines. If they earn too much or too little in relation to their monthly expenses they normally will not qualify to have the terms of their home mortgage modified. There is a small (financial) window that the borrower must fit into in order for a loan modification to be granted by the lender.
Providing the borrower fits inside this “window”, the next step is negotiating with the lender to modify the terms of the loan. This is much more difficult for a borrower to do on their own behalf for a variety of reasons.
Oftentimes, if the lender agrees to modify the terms of a loan directly with the borrower, the modification is not suitable or beneficial to the borrower. This is evidenced in the fact that approximately one out of three of these “modified” loans are in arrears again after only 3 months, and one out of two are in arrears after 6 months! The basic reason these loan modifications failed is that they were not good enough, nor in the best interest of the borrower!
Enter Loan Modification Representatives
Loan modification companies have popped up all over the nation in an effort to help homeowners struggling to keep their homes. These companies promise to reduce payments, rates and even principal balances of borrowers’ loans for a fee. Many have taken fees up front and disappeared with the money. Others have failed to accomplish any benefit for the borrower. As a result, the Attorneys General offices around the nation have come down on these firms for their scrupulous practices. Today we are beginning to see regulation and licensing of firms that do loan modifications in order to protect consumers.
Of course, not all Loan Modification Companies are bad. The opposite is quite true; some firms that specialize in modifying loans for consumers are incredible and have saved borrowers large percentages off their interest rates and monthly payments. They charge appropriately for their services and offer guarantees of results.
Negotiating Skill
Experience and skill in negotiating with lenders to achieve loan modifications for borrowers is essential in helping homeowners stay in their homes today. Experts trained to negotiate on behalf of borrowers are oftentimes able to stall any foreclosure proceedings, restructure the terms of the mortgage note, push missed payments onto the back of the loan, reduce the interest rate, extend the term of the mortgage and possibly even lower the principal balance of the note.
Not every homeowner will qualify for a Loan Modification as stated above, but if the homeowner’s goal is to stay in their home, modification is normally the first step to take when the owner finds themselves in a challenged financial position. The important thing for a homeowner to remember is this: Do not wait too long; get your questions answered as soon as possible, as it will afford more time and more options to get the help you need!
Determining if You Might Qualify
Typical questions that a lender and/or Loan Modification Company might ask a borrower include:
- Are you current on your mortgage payments?
- Are you an owner-occupant or an investor?
- What is your loan type (option-ARM, ARM, fixed rate, balloon)?
- Who is your mortgage company (different banks have different guidelines)?
- Are you experiencing a hardship?
- Do you have income to support a possible loan modification?
- Do you have cash reserves?
The answers to these questions will provide a starting point of what might be able to be accomplished for the borrower by way of loan modification.
Take that First Step
The New “Obama Plan” passed on March 4, 2009 is expected to help between 8 and 9 million Americans successfully modify their mortgages. Will you be one of them?
We have researched a number of Loan Modification Companies in Minnesota and have found a predominant firm that:
- Has been certified by the Minnesota Department of Commerce as a Residential Mortgage Originator
- Is a Loan Modification firm conducting business in all 50 states
- Is licensed in Minnesota to negotiate Loan Modifications on behalf of borrowers
- Has teams of attorneys, as needed, that can assist in various stages of the process
- Have a large number of satisfied customers
You may inquire about modifying your home mortgage here. After supplying some basic information, you will be contacted by a representative of this Loan Modification Company within 2 business days to assist you.
If you do not meet the criteria for a Loan Modification, but are experiencing a financial hardship and cannot maintain your mortgage payments, we suggest you contact Jeff Scislow, RE/MAX Results at (952) 431-3900 to discuss other alternatives, including a possible short sale of your home in order to avoid foreclosure possibilities.
