What is loan modification?

We hear the phrase more and more often: loan modification. What exactly is loan modification?

When borrowers get in trouble, they can't make loan payments. The bank is left with a few options that are ugly for everybody. Often, the best option is loan modification.

Loan modifications allow the bank to make loan payments more affordable for borrowers. They may change interest rates, loan terms, loan balances, or other parts of the loan agreement. For a closer look, see how loan modification works.



You have many options.

1.) You CAN attempt to contact the bank yourself. If you do this you will be basically be hanging on the hope that the bank will modify the loan for you simply because you have a hardship. My experience is the banks generally don't give an individual the time of day...and they really should. If the banks would just work with their clients and treat them like they should, a lot of this foreclosure mess would be minimized. Normally, a couple things happen:
-The bank gives you the run around until you give up or foreclose.
-The bank may say they're willing to work with you, then they set you up with a 3 month (or some other short term) low interest rate and then kick your rate back to it's original rate.
-The bank simply refuses to modify your loan at all.

The bottom line is the banks see you as however much money they can squeeze out of you, the problem is, most individuals can't squeeze back.

2.) You can use a professional loan modification specialist to help you get the job done. This is where you can start giving the banks a little pressure in return. I've outlined a very simple, easy to understand loan modification process on my http://www.loanmortgagemodification.com web page (Under the "Services" section). You can check the steps we take as a company when doing a modification to make sure the companies you're looking at are worthwhile. Things to look for:
-Many companies are trying to do modifications under the principles of real estate alone. Essentially, they're just hoping your financial hardship and the threat of your possible foreclosure will be enough to convince the bank to modify the loan. This doesn't give them much leverage in the renegotiation of your terms.
-Our company (and any company worthwhile) has a law firm that specializes in loan and mortgage modification. With a team of lawyers we can actually do an audit on the bank for your loan. We request ALL information throughout the entire history of your loan and the bank is legally obligated to give us everything within 20 days. There are so many laws governing loans that banks always make infractions somewhere (Which is wonderful!). We use these infractions as leverage in our modification. If banks aren't willing to negotiate and lower terms, we now have the option to take them to court or in some instances, where there are particularly severe infractions, we can rescind the loan. This means we can actually force the banks to give up your loan, they have to pay you back ALL of your interest paid to date and you simply have to find a new bank to take on your loan. Use your interest as a down payment on your new loan if you like!

This loan audit gives extra leverage to negotiate excellent terms for your modification. I can't stress enough to find a specialist that has a team of lawyers dedicated specifically to this task. Our company averages 5.5% fixed rates (for however long you desire 30 year, 15 year, etc.) and in many cases it's also possible to negotiate down the principal of the loan as well (like your loan has a possibility of being lowered to market value).

There are fees involved, and they can vary from loan to loan depending on loan size, the bank you have your loan with, if you have a 1st and a 2nd, and various other factors.