The Mortgage Loan Modification Process - How Does It Work?
The Loan modification process should be considered by those individuals who have
failed to pay their mortgages in a timely manner as an alternative to foreclosure. The aim of this process is to reconstruct the loan repayment schedule in order to help the borrower and provide him with a new, affordable payment so he can become current on his mortgage, and, hopefully, remain that way.
People who truly wish to save their homes from foreclosure should consider loan modification as their single best option; it can take what seems like a hopeless situation and transform it back into what home ownership really should be - a piece of the American Dream. In this article, you will learn the basics of the loan modification process and how it works for the improvement of your financial situation.
-The 3 basic steps of the loan modification process-
When starting the process for modifying your loan, you will need several documents and be able to prove the financial hardships you are facing which have resulted in forcing you into default. This information has to be provided to the lender. The documents needed include recent medical records, bank statements, paycheck stubs, and so on. Depending on the financial hardship you are facing, more documents may be needed for the loan mod to meet approval. Your loan modification application will be rejected if you fail to provide all the documents required and asked for by the lender.
Negotiations are held between you and your lender. The lender will review your case and accordingly come up with a solution or new schedule of payments. If the new terms are still too onerous to manage, you will need to provide more data and negotiate further. If you have no problems with the new schedule then the loan modification process will proceed further.
The last step is the approval of the loan modification. In this step the lender and borrower come to an agreement and the final documents are signed. This can be a very complicated situation, and it is critical that you communicate well with your lender and gain his respect.
The result of a successful loan modification process is that you will have much more reasonable repayment conditions. You will also receive the assurance and peace of mind that comes with knowing you'll be able to keep your home. Since these negotiations are highly professional, you may wish to consider seeking professional help in order to resolve any underlying factors that led you into default in the first place - so it doesn't happen again.
If you are more than 3 months behind, and your home is on the verge of foreclosure, then your best option is to procure professional help immediately. Unfortunately, attempting to handle the negotiations yourself at this late stage will often lead to the lender simply attempting to ride roughshod over you; lenders will be much more cooperative if you have a mortgage loan modification professional with legal backing to fight on your behalf to the full extent that the law accords you, both as a homeowner and an American.
by: Frederick Erickson
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