Difficulties In Obtaining Loan Modification

While the idea of a loan modification may seem appealing to some, the reality is that it is extremely difficult to get a lender to agree to a loan modification.  Many homeowners who attempt to obtain loan modifications find that lenders are less than willing to negotiate a home loan modification.  In theory, it would seem that a lender has a vested interest in offering loan modification programs to borrowers.  After all, if the lender is forced to foreclose, they will lose a significant amount of money.  However, the problem is that in the United States, the lender of most home mortgages is not the actual owner of the loan, but simply the servicer.  They are responsible for collecting payments, dealing with the customer and handling the paperwork of a mortgage – services for which they charge a fee.  The actual owner of your loan is likely thousands of investors who each own a small piece of a mortgage pool.

For the mortgage company that handles your loan, their incentives lie with the lucrative fees and charges they receive while managing your loan.  Delinquent homeowners allow the mortgage company to profit, as they charge fees for various legal and administrative services associated with foreclosure and collecting from delinquent borrowers.  Your lender may actually profit more from your delinquency than they would by accommodating your loan modification.

Loan Modification Scams

With the difficulty homeowners have in obtaining loan modifications from their lending institutions, a variety of loan modification scams have reared their ugly head.  These fraudulent loan modification companies will charge a fee, claiming to have inside connections with your lending institution that will get your loan modification approved quickly.  Other loan modification fraud rings will pretend to be affiliated with or otherwise approved by an official government loan modification program.  These fraudulent loan modification companies also take advantage of desperate homeowners by charging large fees up front, disguised as fees necessary for government mortgage modification programs.

There are a wide variety of other loan modification scams, but suffice it to say that most 3rd parties offering to assist with loan modification for an exorbitant up-front fee are scams.

Are Home Loan Modifications A Long Term Solution?

Loan modifications are highly sought after, despite the difficulties many homeowners have in obtaining one.  Loan modifications offer a tantalizing hope to a desperate homeowner – the hope that they just might be able to keep the house they love, the house they’ve built their life around.

Unfortunately, even with all the difficulties associated with obtaining a loan modification left aside, the loan modification itself is not the long term solution it promises to be.  In most cases, a loan modification cannot address the root of the homeowner’s delinquency.  If the reason the homeowner is failing to keep up with mortgage payments has to do with reduced income or a significant drop in property values, then merely modifying the interest rate or principal of the mortgage payment is simply throwing good money after bad – as the distressed homeowner often ends up facing foreclosure again in the near future.  An appropriate alternative to a foreclosure needs to offer the distressed homeowner a fresh start, without the negative financial and psychological consequences associated with the foreclosure process.

Unlike loan modifications, a short sale offers the homeowner a chance to relieve themselves of their debt burden.  For a homeowner struggling to make payments on a mortgage worth significantly more than the value of their house, this can be not only a psychological relief, but it offers the homeowner a chance to begin anew.  Additionally, a short sale can allow a borrower the opportunity to salvage what remains of their credit, will allow the homeowner to purchase a home again in as little as two years, and also allows the homeowner to avoid the public humiliation of a foreclosure eviction and auction. To find out more information on short sales vs foreclosure contact us today. 1-877-737-4903.

While a homeowner will look at loan modifications as a way to save the home they love, it’s important for the homeowner to look at their situation objectively and ask themselves the tough questions.  Assuming they could even get the lender to agree to a loan modification, would that enable them to make their mortgage payments in the short term as well as the long term?  Is it financially viable for them to make the mortgage payments on a home worth a fraction of the value of the mortgage?  Is there a legitimate, tangible reason to believe that their income will increase significantly in the near future, allowing them to return to financial stability?

If the homeowner can objectively answer yes to all 3 of these questions, then perhaps a loan modification may be the right solution.  Unfortunately for most homeowners, the objective answer to these questions is “no”.  For these homeowners, it’s important to start looking at alternatives to foreclosure that may involve selling their home.  As difficult as it may be, it’s important for the homeowner not to look at it as a loss, but rather as a chance for a fresh start.  At the end of the day, a house is only a house, worth what you can sell it for – but peace of mind is absolutely priceless.

For any further information about the short sale process
feel free to contact us

www.Short-Sale-Specialists.com

877-737-4903

Ask a local short sale specialist!