Industry analysts said that thousands of distressed homeowners are trying to avail of loan modification to help them meet their monthly mortgage payments and avoid turning their properties into foreclosed homes.
However, they pointed out that loan modification is not easy to obtain. Many of them encountered problems such as long waiting times, arduous volume of paperwork and fraudulent services that many of them often end up in foreclosures anyway.
To ease the ordeal of getting a loan modification, industry experts advise distressed homeowners to understand the process first before having their mortgages altered into affordable payment terms.
They explained that a home mortgage modification is given only upon the approval of their lenders. The process works towards altering some of the loan terms in order to make the mortgages affordable to pay.
In California, a home mortgage modification program involves altering troubled loan terms by means of either reducing interest rates or principal loan amount, changing the amortization schedule or other ways that could lower monthly payments to not more than 38 percent of the ratio of the borrowers’ debt-to-income.
Experts pointed out that a loan modification is not similar to refinancing, with the latter involving the issuance of a new loan to write off the old home loan mortgage. They advise homeowners to seek the help of professionals immediately as soon as they feel that they would not be able to meet their mortgage.
There are counselors approved by the U.S. Housing and Urban Development (HUD) who give free advice on how to avoid foreclosures and could help homeowners negotiate with their lenders.
Additionally, homeowners could ask referral from their relatives or friends or from anyone who had successfully completed the modification process. As each bank’s modification process is different from one another, homeowners should make sure that a representative from the bank explains the process to them.
The goal of understanding the loan modification process is to make sure that homeowners come to the negotiating table prepared and knowledgeable so that lenders would immediately take notice that they are serious about saving their homes from foreclosure and are willing to go through the entire process.
That is why industry experts also recommend that homeowners organized the required documents necessary for obtaining a loan modification before sitting down with their lenders.
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