What Is A
Loan Modification, And Who Qualifies
By: Mike Dunn
The author has permitted the reprinting and redistribution of this
article.
Have you been hearing a lot about loan modifications? The term seems to
pop up everywhere these days. But what really is a loan mod, and who
can qualify for one? A loan modification is an agreement that is
negotiated with your lender that changes the terms of your current
loan. It can alter the characteristics of the loan term, rate, balance,
and penalties. Lenders can be willing to negotiate when you are facing
financial difficulties and can not find other financing alternatives.
You must be able to show your lender why it would be in their best
interest to agree to a modification.
A lender may be willing to reduce the interest rate, monthly payment or
change other terms. It is important to understand that a loan
modification is not reported to the credit agencies and will not have
an adverse impact on your credit scores. Today lets take a look at what
characteristics the banks are looking for when reviewing your loss
mitigation case with the lender. Every lender is different, so there is
no exact science to determine if you truly qualify for a loan mod.
Based on information we retained from the e-book Loan Mods done right,
below is a list of potential reasons why the lenders will allow a loan
modification.
Someone who no longer qualifies for a refinance
Someone currently in an adjustable rate mortgage (ARM)
Someone who is behind on their mortgage (it is always recommended to
make all mortgage payments as agree when able)
Someone whose mortgage payments have become high
Someone who has experienced a hardship
Someone who is self employed during tough economic times
Someone who has no equity in their home or is “upside
down”
Someone who is about to go into foreclosure
Are you one of these someone? The more of these categories that apply
to you the better. The government is forcing the lenders to negotiate
and modify Thousands of these loans, so they are picking and choosing
who get a mod, and who doesn’t. So why are the lenders doing
this? With the housing market in total disarray, the lenders loosing
money, and the economy on a huge downturn, the banks would rather
modify your loan terms then take on another Foreclosure. Equity in
homes has all but disappeared and in many area’s become
negative, leaving homeowners upside down on their loans. Banks would
rather reduce the payments and/or balance than foreclose on another
property. The banks and lenders are not in the real-estate business,
and they don’t want to start now. The fact that banks are
willing to negotiate lower payments brings about this part of the real
estate cycle know as “The Modification Period”.
Although extremely rare, during these periods, both the bank and the
borrowers are deemed powerless. Both face tough times ahead and only as
a team can the banks and borrowers pull out of this deep real-estate
tailspin. They must work together to keep Americans in their homes but
also to begin to turn this recession around. Loan modification often
equates to immediate financial losses for our banking institutions, but
the long term gain will well outweigh the short term loss.
By slowing future foreclosures through loan modifications, the banks
will begin to firm up soft markets. This in turn will offer relief to
the homeowner’s upside down on their loans. Slowing the
foreclosure crisis right now is the first step to jump starting the
housing markets again. So if you think you are a potential customer for
a loan mod, the time to act is now!!! You can attempt a loan
modification yourself, or you can hire a company.
Mike Dunn is a Senior Wholesale Mortgage Executive who specializes in
loan modifications. He is the author of loan mods done right. The
website http://www.loanmodificationbookstore.com is one of the best
deals on the internet. His Loan mod e-book is one of the best deals on
the market. It’s a $209.00 value for only $19.99. Order yours
today.
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http://www.vmiproperties.com