How Obtaining A Loan Modification Helps Consumers Stop A Foreclosure Auction
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By :
Nick Adama
Submitted
2009-11-20 21:52:58 |
Receiving a debt modification is one way that a home owner can avoid foreclosure. All consumers do not meet requirements and not all lenders are participating. But, if you are struggling in paying your mortgage, it is worth your while to call your mortgage servicer and find out what options they provide. You may not always get the answer you are looking for, but once you get the right person on the phone, you will drastically increase your chances of keeping your house and prevent an eviction.
A debt modification can take many shapes. It is a permanent change in the original arrangement made between you and your servicer. In other words, it's not a temporary fix, like a workout plan or forbearance agreement; it's a lasting plan that will continue for the life of the loan. But you should know that most lenders will not agree to a loan modification if a temporary fix would also do the job. When talking to them about a loan modification, you will need to present your case in the best possible light. This is a good reason to hire a professional to present their problems to their lender, rather than attempting such an important task on their own.
The terms that can be changed include the interest rate, the length of the loan, the amount of the monthly payments and the amount of the principal, but only in uncommon situations is the principal reduced. Usually, adjustments are made that increase the principal in order to cover any past due amount or other charges that could result in a lien being placed on the residence. If a debt reduction is required to make the debt manageable, and it can be justified by a market value that has declined since the purchase, then an adjustment can be an option. In every case of a modification, we recommend acquiring a BPO (Broker Price Opinion) or a Property Valuation to prove the current value to your lender. A full value assessment is expensive and generally not necessary. The two alternatives we have just mentioned above can be purchased for around $100 and should adequately document the value to your banker.
Mortgage institutions all have waiting periods. Some banks seem to take longer than others to respond to their customers. Bank of America, for example, has been mentioned in hundreds of accusations to the Florida state attorney general for being negligent to proceed promptly when contacted by homeowners. It's very important to not just sit back and wait for your mortgage servicer to take action. You need to be assertive by communicating with them on a regular basis and making sure you have submitted all the documents they requested.
Typically, a lender will offer the property owner a "trial period". If you are offered a trial, you will be asked to make your payments promptly for three months consecutively. Some mortgage servicers allow you to make the modified, reduced payment. Others ask for your current payment, whatever that may be. Many cases we see, start with a workout plan and then the terms are modified after the first three installments. A workout plan is when you make your original payment, plus an additional sum that is applied to the past due total. This optional plan requires you to make three increased payments until the loan is modified.
A major hold back with agreeing to these conditions is that you are trusting in your mortgage servicer to actually alter your loan three months later. History tells us lenders seldom follow through; and will say almost anything to try and collect cash owed to them. Trusting them is never a good idea; so demand that you get everything in writing and follow any plans you've agreed to. Never agree to a modification, workout plan, or repayment plan that is not achievable.
Overall, a loan modification is most likely the best choice you may haveto keep your residence and stop eviction, so don't just sit there worrying but get started today. Your first decision is to call your mortgage servicer and inquire about possible options to halt eviction. They should have a standard loss mitigation package for you to complete and return to them. If they don't respond with an affordable plan, or worse yet, don't respond at all, then you may need to hire a professional to negotiate your best options.
No matter what happens, you'll know you did everything possible to prevent a sheriff's sale. |
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Author Resource:-
Nick publishes articles which gives homeowners the foreclosure advice and resources they need to save their homes on their own and fight back against the bank. The site describes various methods, including foreclosure loans, deed in lieu, loss mitigation, stopping a foreclosure auction, and more. Visit the site to read more about how you can avoid losing your house and repair your credit: http://www.foreclosurefish.com/ |
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