Loan Modification Steps

Step 1. Find out who you should contact

Before even contacting your mortgage company you must find out if you are dealing with a mortgage servicer or a mortgage loan originator. A mortgage servicer is responsible for collecting your monthly loan payments and crediting your account. A servicer also handles your escrow account, if you have one. A mortgage originator on the other hand is the broker or bank who secured you mortgage loan in the first place. This does make a difference as mortgage servicing companies tend to be a bit more equipped in dealing with loan mod requests as they typically have a longer term outlook on loans and have special departments assigned to loss mitigation and foreclosure prevention.

Step 2. Learn about your Lender's Loan Modification Policies

Become familiar with your lender’s loan modification policies. Find out if your mortgage company is willing to discuss modifying your loan if you are not yet behind on your mortgage payments. Some lenders require borrowers to be delinquent for at least three months before they even accept applications for loan modification. If you can no longer afford making payments on your mortgage becuase of job loss or health issues, you might not even be qualified for a loan mod.

Step 3. Request your Lender's Loan Modification Package

It is prudent to call and request a loan modification package from your lender before discussing with them your specific case. By reviewing their package, you will know what information they need and what their policies are. Doing so will provide you with ample time to prepare your answers to the questions you might have otherwise been asked over the phone. Additionally, by conforming to your lender's own unique form you will have a better chance for a response than other applications which are submitted in other formats and hence have fallen to the bottom of the pile facing delays in processing.

Loan Modification Rip off or Rescue?

Being that I've been in the real estate and mortgage industry 10+ years I felt like I had seen mostly every scam and fraud out there. Unfortunately not! The number of "Loan Modification" companies popping up out of the blue is litterally frightening. Typically when a homeowner is in need of some type of assistance such as a loan modification the lender holding there mortgage is the first place they contact. Today they are overwhelmed with loan modification offers filling there mailboxes claiming how they can help get them out of trouble for a nice fee of course.

Consumers and homeowners who find themselves unable to make their mortgage payments or who have fallen behind due to some type of financial hardship are like sitting ducks to these companies. They prey on homeowners by searching courthouse records for foreclosure filings and mailing them ridiculous "guaranteed" solicitations to assist in saving there home. Even mortgage brokers and loan officers are getting in on this popular loan modification scam. Usually the fee to modify the loan is equivalent to one months payment or 1% of the balance of the loan. Mnay of these companies require payment upfront and will not refund any amount regardless of the outcome. Homeowners need to be extremely careful in dealing with companies offering to modify there loan for a fee. Doing so could result in them having less money to try and reduce debt which could help the overall situation.

Who will be helped by obama housing fix?

Don't have a job?

Struggling to keep up with payments on a home worth less than half the mortgage?

Owe way more than your home's value, but can still afford the payments?

Sorry, but you likely aren't among the 9 million people who may get help under President Obama's $75 billion foreclosure prevention program.

The program, unveiled Wednesday, is being hailed as the most comprehensive fix for the foreclosure crisis plaguing the nation. The president says it helps both responsible homeowners suffering from falling home prices and borrowers either at risk of or already in default.

But not everyone will benefit. The program does virtually nothing for the unemployed, who often don't have enough income to make any reasonable monthly payment affordable. And, since it relies more heavily on lowering interest rates than on reducing principal, it does little for borrowers concerned their homes will never recoup their value.

Get a detailed Loan Modification guidebook by clicking here