Assistance with Loan Modifications

July 3, 2009 by Julio
Filed under Loan Modificiation

Many people are in a position where they need assistance with loan modifications. If you are having problems paying your mortgage, then you like need help in modifying your loan to a level that you can afford. Many people are unaware that this is possible, and a while ago it was a lot more difficult than now. Here’s why.

When the subprime mortgage business collapsed, many banks and building societies lost a lot of money, to the extent that a few folded. They then became nervous of those unable to make their payments and employed a policy of foreclosure. Although it might seem better for them to keep people in their homes so that they would eventually make some money from them, automatic foreclosures were found cheaper to them than the costs involved in modifying individual mortgage terms.

Mortgage lenders are therefore very reluctant to improve your repayment terms in order to let you keep your home, possibly in case that later comes back to bite them when you finally went bankrupt owing them even more money. Until recently, loan modifications were not easy to get. You could get them, but only if you were lucky and had a professional do it for you.

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Now, however, it is lot easy since President Obama introduced his Foreclosure-Prevention program. Foreclosures in the USA are reaching epidemic proportions, with 3.1 million foreclosures filings being made last year, a rise of 81% over 2007. The situation is particularly bad in Nevada, Arizona, California and Florida, where rates of up to 4% of the housing stock being foreclosed. With forecasts of even more dire increases this year and next, something had to be done and it was, but how effective will it be?

To qualify for the program, you must owe no more than $729,750 on your home, it must have been purchased prior to 2009 and also be your main residence, and your current monthly mortgage repayment must be over 31% of your gross monthly income. Additionally, you must be able to prove extreme hardship, all of which disqualifies a large number of people.

It assumes that you must be in work, and able to pay a reduced mortgage, while many being repossessed have been made redundant or forced to work at reduced wages due to the activities of the institutions foreclosing on them. It is ironic really, that those that may have caused this situation are making those that are blameless suffer. It seems like the program will help those that still have a job, but have overextended themselves with credit, being able to get by with a reduction in their monthly obligation.

If you are one of these people, then a loan modification will certainly help. Where it will not help is if your mortgage repayment is below 31% of your monthly income, and your main problem is credit card debt that you are paying rather than your mortgage. Many people are in that situation, and everyone is advised to pay their mortgage first and the rest after that.

At least if your mortgage is up to date, there are laws that can help you to refinance it, such as another program in the Obama program. That can save you even more money in your monthly payments than a modification can. However, if you have arrears, there is little you can do about that, and your best bet is to apply for a mortgage loan modification.

However, if you believe that you can qualify, then you can save a few hundred dollars on your monthly outgoings through this program. More importantly, you get to keep your home. However, you will certainly need some help in working your way through the rules and regulations governing loan modifications.

You have to provide specific items of documentation to back up your claims, because everything you say or claim will have to be proved. Tax returns, salary slips, mortgage payments, banking details, credit card files – everything needed to provide a clear picture of your financial situation will be required. You also have the proper forms to fill in the correct way.

There is more, such as the correct wording of your extreme hardship letter that could make or break your claim. You need either an expert to help your or some good information on how to go about applying the right way. You can find such assistance online in the form of modification application packs that tell you exactly what documentation you will need, and how to fill in the forms concerned.

They give you a lot more information than just that, and most offer a guarantee. If you believe that you need assistance with loan modifications, this option is relatively inexpensive, and very effective if you exactly follow the instructions provided.

Your complete step-by-step guide to getting a loan mod,
saving your home from foreclosure,
and saving 1000s of dollars.