Loan Modification

Loan modification is hailed as the answer to the current mortgage crisis that is causing so many homeowners to lose the family residence to foreclosure. Not only does this procedure permit the homeowner to stay in their home, but it helps protect their credit from the adverse effects of a foreclosure! In short, loan modification is a means of avoiding foreclosure for homeowners who are upside down in their mortgage loans and therefore do not qualify for a simple refinance loan.

At this point in time government agencies, private entities, and law firms have set up divisions that specialize in loan modifications. Helping homeowners to traverse the maze of red tape, gathering the needed documentation for a loan modification application, and most importantly successfully negotiating on behalf of the homeowner are just some of the services offered by these professionals. The advantage of having such assistance is obvious: since for many a homeowner the loan modification is a last ditch effort at saving a home that might otherwise fall victim to foreclosure, care must be taken to negotiate the best terms possible that are also as advantageous for the borrower as is permissible by lender guidelines.

It is interesting to note that consumers contacting their lenders directly in an effort to negotiate a loan modification almost always fail to receive the best terms possible. Homeowners showing the highest success rates are those who work with attorneys and mortgage professionals well versed with RESPA and TILA guidelines. Those in need of such assistance must exercise great care when selecting the right company.

In addition to the foregoing, homeowners must be aware that the governmentally stipulated homeowner relief packet that stipulates a one or more month(s) hold on foreclosures is not the same as a loan modification plan but instead it simply offers a window of time that the wise homeowner will utilize to actively pursue a loan modification. It is crucial to get the loan modification process started as soon as possible to turn a financial hardship around and potentially not only save a home and credit rating but also the ability to retain many of the consumer goods and little luxuries the borrower may have become accustomed to owning.

"Lost Mitigation" is a misnomer of the phrase "loss mitigation". In the context of mortgage modification, loss mitigation is the process by which a mortgage lender attempts to reduce their losses by employing collection and recovery tactics to mitigate losses. A loss mitigation consultant is the counterparty employed by the borrower who's function is to represent the borrower in loan modification negotiations with the lender.

For several years mortgage lenders have been making loans that were designed to only last a few years.  The theory was that real estate prices would continue rising and people would be able to sell or refinance.