Mortgage Best Rate

Benefits of a Loan Modification

What are the benefits of a loan modification? With the economy still on unsteady ground, homeowners continue to feel the pressure of keeping their homes. If someone is looking at the possibility of being unable to keep up with their mortgage payments, it may be time to look into a loan modification. Loan modifications can offer many options for a homeowner, including a reduction in monthly payments, a lower interest rate, or even a principle reduction. While it is possible to negotiate a loan modification with a Lender without outside help, the best results are achieved with an experienced loan modification attorney. These attorneys have experience working with Lenders and the legal knowhow to postpone the foreclosure process while the negotiations are taking place.

Through a loan modification, borrowers may be able to lower their interest rates, move from an adjustable rate to a fixed rate, move missed payments and penalty fees to the back end of the loan and reduce the principle of the loan. Because of all these possible benefits, a loan modification should be the first avenue a borrower should investigate if they are in financial trouble, and it is a far better solution than foreclosure.

Once a borrower initiates the loan modification process, their lender will require them to submit multiple documents, applications and forms so that they can get a feel for the borrower’s financial situation and begin to work out what kind of modification may work.  Financial burdens such as past bankruptcies, late payments and poor credit scores will not stop borrowers from being able to qualify for a loan modification, and with an attorney’s help the odds of successfully negotiating a loan mod can improve greatly.

When applying for a loan modification documents proving income, current assets and loan information will all be requested by the bank, along with a lot of paperwork that needs to be filled out correctly. If an application is filled out incorrectly the Lender will require the borrower to resubmit the forms, which will take more time in a situation where there isn’t much time to spare. An Attorney can help a borrower make sure all the proper forms and documentation is in order and ensures these things are submitted in a timely manner.

The most important thing to remember with a loan modification attorney is to make sure they are reputable and not engaged in unethical practices. People considering hiring a loan modification Attorney should check with their state’s bar and make sure the Attorney they are considering is in good standing. If an Attorney is asking for upfront fees, including a retainer, it may be a sign they intend to keep the money and not help their client. In California the collection of payment before loan modification services are rendered is now illegal.

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