5 Things Commonly Misunderstood Regarding Mortgage Loan Modification

by Robin Miller on January 30, 2012

The Lender Will Give Better Results For Mortgage Loan Modifications Than a Loan Modification Company.

Think about this one… The lender is taking the loss overall so going directly to the lender and giving them the authority could end up more favorable on their terms or the loan modification gets denied which happens for a number of reasons. If a debtor seeks modification for a mortgage loan,they can contact Certified Financial Counseling Specialists. A qualified counseling firm with good reviews with the Better Business Bureau and Certified Counseling Specialists and qualified attorneys is a superior option. Thousands of requests are received by lenders from homeowners submitting their packages, some are successful but most don’t succeed, which makes the process prolonged. Having a certified financial counselor working on behalf of the homeowner can ensure that applicants receive the necessary time and individual attention their case deserves. Certified financial counselors assist individuals by giving them best practiced alternatives as opposed to banks and other lending institutions. Right now you should reevaluate fully trusting the lender.

The Lender Would Rather Foreclose Over Loan Modification.

The cost to foreclose on a property is a costly expense on the lender therefore it is much more cost effective to modify the loan with the debtor. Foreclosed properties incur costly processing fees and often expensive repairs, and can cause a decline in home values, so lenders don’t find them very appealing. The lenders are in the business to lend money and receive returns on their investment not purchase back homes for resale. Since the mortgage meltdown the foreclosure rate over the past three years has been at an all time low since 2008. This is mainly a result of loan modifications. It is highly likely that lenders will approve a loan modification if they are convinced that the mortgage loan modification will benefit the repayment of the loan.

You can’t do much when you get foreclosure letter.

Receiving notification of foreclosure does not automatically mean that you will not be able to qualify for a mortgage loan modification. Even after a homeowner is hit with a foreclosure notice they are still eligible for a mortgage loan modification. To slow down the process of foreclosure file a modification immediately. With these programs, you must apply quickly because the duration of the programs are limited. With resales down, the market is ripe for negotiating new terms on your mortgage.

Delinquency on the payments is a requirement for a loan modification.

The only requirements are proof of hardship showing that the homeowner can’t make their payment on time. A hardship can be viewed as foreseeing that they will not be able to maintain future payments due to certain circumstances such as, a significant loss of income, medical issues, divorce, and many other reasons. Loan Modification for a mortgage is a beneficial method to use to prevent foreclosure if a homeowner has a lapse in mortgage payments.

The credit score is damaged by Mortgage modification loans.

This really depends on the lender and the way it is modified; overall the mortgage loan modification has low impact to the credit in comparison. A mortgage loan modification is surely more favorable considering foreclosure along with defaulting with the bank, though the program is hard to follow.

The important aspect is education and the preventive measures one takes.

Having a good understanding on how Mortgage Loan Modifications work is key and homeowners should understand that foreclosure is least favorable to the lender. Seeking services from a certified financial counseling specialist who can help expedite the process is highly recommended.

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