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Categories: Foreclosure Information, Mortgages, Short Sale Information July 1st, 2009

What is all the Fuss about Loan Modifications

Economic hard times have hit, and hit hard. That is not a news flash.
-home values have dropped drastically
 -homeowners cannot sell for what they owe when hard times hit
 -the terms of an adjustable, or reset mortgage are now so high that the owner cannot afford the payments
 -economic problems (job loss, stock loss, etc) prevent the seller from making the payments as originally agreed.
 -And many other scenarios
The most important factor is that the borrower wants to lower their interest rate, lower the principal balance owed, lock the rate in for an extended period.

The process is similar for all most lenders. A call is made to request a Loan Modification Package, you receive it and give information about your homes value, your financial status, a “hardship” letter and other pertinent information.  You return the information to the bank. The bank then determines the value of your house.  The bank then uses all this information to analyze your situation.  Using this, as well as other factors and criteria such as the banks default rating etc, they then offer you a package of some kind.  The package can be counter or adjusted but in most cases the bank will not make significant adjustments to their initial offer.

The bank can make adjustments to the original loan in any way that benefits the bank and the borrower.  I have heard of very interesting and unusual arrangements.  Everything is on the table, and this is where an expert negotiator who deals with this every day can be very beneficial.  They know how to structure a deal that will be acceptable to the bank  and beneficial to the borrower.  But be careful in hiring such an expert.  See my article on Loan Modifications – All the Rage for Distressed Homeowners.

Tags: dirstress, foreclosure-Disclosure, Loan Modification