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Monday, March 2, 2009

Loan modification is not new been around for many years.

By John Krol

Has been around for many years. What exactly is loan modification? Loan Modification options are typically only available to those people who are in dire straits. By dire straits, this means that you are paying a far greater percentage of your monthly income towards your mortgage payment. Loan modification is designed for homeowners, not investors, so you have a better chance of negotiating a loan modification for your primary or secondary residence ? However, the mortgage lending industry is in such dire straights now that it cannot afford to have any loans go into default.

Banks need to be convinced on the hardship factor diligently in repayment, which could be done better by the homeowner than the loan modification companies . Another fascinating tip he has accounted is that one should not settle for the first modification plan held out by the bank, but should drive for harder bargain and succeed! Bankruptcy is a particularly irrational choice for high-income people who can afford their monthly payments. They'd still have to repay the written-down part of the mortgage balance out of income earned for up to five years, to the extent possible, after paying back secured debt. Banks and other lending institutions do not want to foreclose. They earn more money if you can make your payments.

Servicer assisted short sales: For every individual who does not qualify for a loan modification, a servicer assisted short sale should be pursued right at the point the loan modification decision is made. In a servicer assisted short sale, the (troubled) borrower works with the servicer as a partner instead of adversary. Servicers would receive an up-front fee of $1,000 for every eligible modification meeting the initiative?s guidelines. Guidelines are scheduled to be released by March 4.

Lenders will also be able to bring down monthly payments by reducing the principal owed on the mortgage, with Treasury sharing in the costs. Lenders are incensed, of course, but this would certainly allow many people to retain their homes while continuing to make reduced payments to the bank. If you're so inclined, you may want to write your congressman (or congresswoman) to vote for the bill that supports the amendment of bankruptcy laws. Lenders also often require homeowners to sign a release of any and all legal claims based on the origination and servicing of the loan as a condition of the loan modification. It makes sense to have the loan reviewed to make sure there are not relevant claims being waived.

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