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Friday, June 12, 2009

Mortgage Loan Modification: a few important tips

There are several sides of a mortgage loan modification process, with respect to its relationship with foreclosure and bankruptcy. If you are planning to take to a loan modification, you must know all its aspects & follow the important do’s and don’ts of it, in order to save yourself from all the common pitfalls associated with this process. I want to share with you some important tips regarding loan modification, which you all must be aware of.

1) Proper coordination with lawyer is indispensable
Let us admit this….you are the sole owner of your home, so the main responsibility of your home loan modification is always on only your shoulder, and not on any other’s. Be it your mortgage modification attorney or your broker or your lender…..everybody is there just to assist you in your work, may be doing things of your behalf….but that’s all. Their efforts & activities will add to the over manifestation of the entire process, and help to achieve the success; but full and timely cooperation on their each work is also expected from your end, and proper professional coordination with your lawyer is mandatory. You are required to give them complete & genuine details of your financial situation & answer each question honestly. Do submit all the financial, property, residential & other documents & paperwork timely.

2) Get familiar with mortgage rules & rights
There are lending rules to protect your rights in process of a mortgage modification. Take assistance of a mortgage attorney to get that required awareness of the rules & understand the rights. Though, these rules are not properly followed (or rather, broken) in case of maximum mortgage. Try to gain more knowledge & awareness of these mortgage lending rules….you’ll find out gradually, that these violations practically work for you, and supply you the leverage required for negotiation. Try to use those violations in your favour in a loan modification process.

3) Alternative financial plan-an essential factor
When it comes to the question of saving your home from an unavoidable foreclosure, or going for a loan modification, it is always an useful idea of having 1 or multiple “Backup plans” irrespective of your mortgage attorney’s advise. In fact, you rather take help of your loan attorney to prepare your backup plans. Several situations regarding your home may come up, where your alternative plans may work more than expected. It may happen that-1) You may not qualify for a loan modification, or 2) Your mortgage lender may be very non-cooperative or 3) You no more need a modification of your loan taken, and choose to stay away from it. In either case, your alternative backup plan may work wonderfully for your home & your finance.
A good example of an useful alternative plan is…. Short selling of your home, in case you don’t get a loan modification anyway. In Short selling the selling price of your home would be less than its fair market price. Although you would still loose your home it’s not as damaging to your credit report as foreclosure.

4) No long waiting
We all are scared of foreclosure….we know that at any cost, you have to avoid a foreclosure. But you may ask; foreclosure process has been made to enable a financially troubled person to get over the situation and fix his financial condition, so that his home can be saved. This process practically gives some time, so that you can repair your finance to grab you house back. Then why to avoid foreclosure? But man, listen….too much time in hand is not a safe and ideal option to get you your home back. Delay and longer waiting may be fatal for your home ownership. A mortgage help is rather an ideal way out….so whenever you are set for a loan modification help, get going.

5) Make “bankruptcy” a strict no-no, unless unavoidable
Till date, bankruptcy is thought to be an alternative for foreclosure. So many individuals still tend to opt for bankruptcy, in an effort to avoid foreclosure. But it not the case, practically speaking. The real situation is….even after filing for a bankruptcy, many people are being unable to keep their homes….and even worse is, they find themselves with both a foreclosure and a bankruptcy on their credit records. This really leaves a long term negative impact on their credit profiles. Therefore, as I said before, timely & expert assistance from a professional mortgage law practitioner is damn essential & useful to get rid of this situation…and save home.


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