Loan Modification And Loss Mitigation

Wednesday, December 24th, 2008 at 2:52 pm

Loan Modification Home Saver Program – Avoiding Foreclosure

In today’s tough economic times there are millions of families across the U.S. facing the imminent prospect of foreclosure who are not aware that a loan modification is available to save their homes. Many of them are on Negative Amortization Loans, also known as Option Arms, 2/28’s, 3/27’s and 5-year interest only programs. These loan programs are infamously known as ARM’s or Adjustable Rate Mortgages. They are "fixed" for a specified number of years then become "adjustable" once the fixed period has transpired.

Many of these borrower’s often opted for an interest only ARM so that they can pay the smallest possible payment that they could afford. Many had no down payment and basically could not qualify with a full document loan (paystubs, tax returns, etc.) for the expensive homes that they were purchasing. So along came the Stated Income loan (does not require income documentation, based primarily on credit scores) coupled with 100% financing. Most of these loans were originated before the "mortgage meltdown" crisis we are facing today. Borrowers as well as lenders were "banking" on the continuation of double digit skyrocketing home values in many parts of the nation.

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Well the bubble finally burst and home values declined, leaving over 2 million Americans stranded with very little options available to them other than to sell their house or face foreclosure. Many of these homeowners found themselves "upside down" on their homes (owing more than what the home is worth), due to the plummeting home values in many parts of the country. Adding insult to injury, many of these same people invested thousands of dollars in their homes from new pools, marble floors, granite counters and more, with no intention of being foreclosed upon because their ARM has expired and they have little or no equity and cannot refinance. When given the option or selling their home or being able to renegotiate their current loan, keep the payments affordable and convert to a fixed rate mortgage – most borrowers ultimately choose to keep their home.

One of the best options to accomplish this is with a Loan Modification. A loan modification is when the lender modifies your current mortgage in order to work with you because of a hardship. The purpose is to help make your loan more affordable. Usually it is in the form of a rate reduction and conversion of an ARM (2/28, 3/37, Neg Am) to a fixed loan, typically a 30 year fixed.

In the past this was only used when a borrower was delinquent and suffered a hardship such as a job loss, divorce, illness etc.

Now, borrowers can obtain mortgage help from their lender for unfordable rate adjustments on adjustable rate mortgages.

Most borrowers have tried to work with their lender with little success. The problem with that is you have less then a 10% chance to get approval. Moreover for those borrowers who manage to get an approval to modify their loan, most will not get same result. Be aware that lenders are not going to direct you or help you with what they want or are looking for. One wrong answer and your loan modification request will be denied.

Borrowers are better served when employing the services of a knowledgeable loan modification firm specializing in out-of-court resolutions of Mortgage Foreclosures by negotiating with your lender.

Avoid foreclosure – Modify your loan into a fixed rate loan
Loan Modification Information

What others are saying about Loan Modification Express Help around the web.
Bank Threatening Foreclosure While Negotiating a Loan Modification

The bank will not threaten foreclosure just because homeowners are negotiating for a loan modification or other solution to the problem. The negotiation process is not why they would mention foreclosure as one of their potential options … Read more…

Home Loan Modification Helps People Save Their Homes

With foreclosures on the rise, a home loan modification is helping several home owners from losing their homes. Read more…

I don’t know where to start, please help – Loan Modification Forum …

I am sure I have similar issues to most people you speak with. I can send you my letter so you know the situation if that would help at all. I just. Read more…