It’s a sad thing people are having their homes foreclosed when in fact there is no reason for this to happen. The only reason that a home is being foreclosed is that people do not do something about their loan payment problems. Maybe they do not want to exert efforts to keep their home or maybe they are really having serious financial difficulty that they can’t cope with & have missed several payments on their loan? Whatever the reasons are, they should know that there is a solution to every debt problem. There is always hope for people facing mortgage problems because there are loan modification help free that are available for everyone. Within the first few months President Obama took office, the president prioritized helping the troubled housing market. He planned to help families save their homes from foreclosure by developing programs that pressured the banks to offer loan modification to families who are having difficulties paying their loans. The banks readily participated in the program because of the incentives offered which helped so many families save their homes.

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A loan modification may be the solution for many homeowners to avoid foreclosure proceedings. The process involves negotiation on a loan in which the lender and borrower agree to adjustments on the original mortgage terms. The outcome of this form of negotiation can include lowered monthly payments, a reduced interest rate and even a lowered principal loan amount. The loan adjustments may be temporary or permanent, depending on the individual homeowner situation.

Credit damage will invariably turn up as a question for many homeowners seeking to prevent foreclosure.
Credit damage is not the direct outcome from this form of loss mitigation negotiation. In fact, credit damage is usually the consequence of delinquent loan payments or failing to honor the original loan terms. Many homeowners already have negative marks on their credit profiles due to late and missed payments.

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Is This You? You are facing foreclosure. You want to save your home and will do all you can to stop the foreclosure process. You have contacted your mortgage company and inquired about a loan modification. The representative to whom you spoke told you what information you needed to submit to them so that you can be considered for a loan modification. You’re safe until you hear back from them, Right? No, That Belief Normally is Wrong. Since the start of the current foreclosure crisis, most mortgage companies have had two separate departments working on the files of people behind on their payments and in the process of being foreclosed. Once the foreclosure action starts, there are certain steps which a mortgage company takes. They normally have a department which handles the work at each step along the way from start to end. The people working in this department notify the person who is behind on their payments that the foreclosure process has started. They then file any necessary legal documents. If court action is involved, they route the case out to attorneys in the area and coordinate their activity with them. They track the sheriff’s sale of the property. If the home is not sold at the sheriff’s sale, title to it reverts to the mortgage company. The people in this department then work with local realtors to sell the property. If the person facing foreclosure wants to see what they can do to save the home, there is a separate department at the mortgage company that works with them. The people in this department tell the person what options are open to them. If they want to see if their loan can be modified and their monthly payment lowered, these people tell the person what information they need to submit. Once the information is submitted someone in that department reviews it to see if the payments can be modified. If they can, the person is contacted and an offer is made.

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When you are facing a possible foreclosure, the last thing you want is another disingenuous plan of action that results in little to no monetary help for your situation. Luckily, loan modification options do not fall into this category. Before you investigate too far into the steps of altering your home mortgage, you surely want to grasp as much documentation about the concept as you can. What a loan modification is about is a permanent alteration to a term or several terms in your home loan agreement. It allows a loan to be reinstated, resulting in a smaller monthly payment you might be able to afford. Obviously, with this basic alteration, it is possible to use loan modification to save you from foreclosure in various different ways. The United States government is very aware of all the financial hardships of the country (after all, it caused many of them through the use of the Federal Reserve system). For this reason, they have established plans for government programs to help you obtain a loan modification under certain circumstances. Seventy-five billion dollars have been set aside to allocate to subsidized lenders who are willing to Coordinate with borrowers to modify their loans. This program was designed to give banks a financial incentive to help you cease foreclosure before the home is listed for auction. Also, if you pay your newly modified payments in a timely manner, you will become qualified to earn up to $5000 in credit toward the loan balance. To find out if you are eligible for a mortgage modification, the first thing your lender will consider is your ability to make a modified payment currently as well as in the future. You must have proof of income and complete financial statements with details concerning your income to expense ratio, proving your monetary incapability of making your current loan payments. A hardship letter explaining your financial hardship is also required.

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A loan modification is the most preferable solution to financial hardship for homeowners looking for mortgage relief, and as such has been the focus of a large amount of media attention in lieu of the onset of the financial crisis. Most presumably, you are here owing to that fact you in fact have learned of Mortgage Loan Modifications, the potential they possess to help approximately everybody, regardless if you are behind or current on your mortgage loan, and your probably curious for further facts on Home Loan Modifications and loss mitigation practice. A Mortgage Loan Modification is a permanent alteration in the stipulations of your existing loan as negotiated by you, the house owner and your mortgage holder. Why on earth do I need a Loan Modification? A Mortgage Modification can do a myriad of great things for you. Primarily, optimal Home Loan Modifications lower interest rates, and of course, lower payments. There are mortgagees all around the country saving hundreds of dollars every month because of Home Loan Modifications. Additional advantages of a Mortgage Modification include the prospect of a abatement in the amount owed (principal balance reduction), a alteration in the span of the mortgage, converting the loan into a lower, fixed-rate mortgage, and even refinancing of late fees and legal fees. Saving money each month? Lowering my interest rate? Wow that sounds great. What’s the catch? Why would my bank help me? Your bank has lost a huge amount of money due to foreclosures; most of the homes they foreclose on are underwater, meaning that the defaulted loans are significantly higher than the values of the properties. Sure, your lender will “lose” money when your payments go down, however, receiving any mortgage payment from you is better than no payment at all, or worse, having to foreclose on you.

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The December 1, 2009 new Obama Administration housing help plan is much like the one released February 18, 2009, only difference now the administration is being harder on the banks. With mounting foreclosures the Obama Administration’s plan to help troubled borrowers will help some but not all. At present only a small fraction of people are receiving permanent loan modification less than 5% of the trial adjustments on loans owned or guaranteed by Freddie Mac were converted to permanent modifications as of 30 September 2009. So while Americans facing foreclosure are waiting for a modification, others are going into foreclosure, 14.41% in the 3rd quarter, according to the mortgage bankers association. If no one knows why the conversion rate is low, then this is an issue which needs to be addressed. The banks need to be held accountable for their end of the low modification rate. Borrowers that qualify for a long term modification can keep the lower payments for 5years. At the end of the 5 year period the interest rate will be set to the rate at the time of the adjustment. This is why an income requirement is so critical. If the payments being made are too low then the loan modification would be pointless and damaging, causing negative amortization. Negative amortization will make the balance due high than before the modification. Needless to say your financial documents are extremely important.

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As the real estate crisis sweeps across America, homeowners who are facing foreclosure are hoping to find a solution before they lose their homes. For many, especially those with subprime adjustable-rate mortgages who suddenly find themselves being asked to pay a higher interest rate and more money every month, the only hope is to change the terms of their mortgage by either refinancing or getting a loan modification. But for how many homeowners does this really work? Is loan modification a solution, or just a way to put off the inevitable foreclosure. Loan modification is different from refinancing. When you refinance your mortgage, you take out a new mortgage loan and close the old one. It’s almost as if you are applying for a new mortgage, with all the same fees and credit checks and application process. A loan modification is when one or more terms of your existing mortgage loan are changed. There are several ways that mortgages can be modified to the benefit of the borrower including reduction in principal, reduction or change in the interest rate, reduction in late fees or other penalties, a lengthening of the loan term, or capping the monthly mortgage payment to be a percentage of household income.

If you go online you will find hundreds companies that claim to be loan modification specialists. They state that they will renegotiate the terms of your mortgage with your lender in order to reduce your interest rate and even your principal amount. Of course, the service is not free; they all charge a fee. But the loan modification companies claim that the fee is a fraction of the expense associated with refinancing, while providing equal benefits. A mortgage loan modification is supposed to provide the homeowner with immediate savings by reducing monthly mortgage payments. But consumers should beware because scams abound! Unethical loan modification companies ask homeowners for an upfront fee (often one month’s mortgage payment or more) in order to initiate a modification program. At best, the homeowner may end up paying for a service that could have been done for free by a non-profit organization or loan-modification assistance program. At worst, the homeowner writes a check and the scammer disappears.

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This is a quick overview of some of the things you need to know if you want to work out a mortgage loan modification with your lender. If you are able to come to an agreement, you may be able to use this to keep your home and stop it from going through foreclosure. There is one thing you should keep in mind before you start negotiating with your lender for a loan modification. The people you will be talking to have a job to do, and that job is to get you to agree to pay as much as possible so that the bank makes the best deal for itself. Nothing you say to the loss mitigation employee is confidential. It can and will be used against you, so watch what you say. Prepare yourself thoroughly before you speak to your lender’s loss mitigation department. Arm yourself with copies of all of your bills for the past year, both paid and unpaid. Also have copies of your pay stubs or other proof of income for at least one or two months. You might also be required to produce copies of your tax returns for the past two to three years. If there is a specific hardship that has come up which has impacted your ability to pay, you need to be able to prove it.

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Prepare yourself thoroughly before you speak to your lender’s loss mitigation department. Arm yourself with copies of all of your bills for the past year, both paid and unpaid. Also have copies of your pay stubs or other proof of income for at least one or two months. You might also be required to produce copies of your tax returns for the past two to three years. If there is a specific hardship that has come up which has impacted your ability to pay, you need to be able to prove it.

When you are working with a lender to get a modification, you must keep records of everything that is said, as well as any correspondence sent or received. Some banks are notorious for saying they didn’t receive something when they did or trying to change the terms that were agreed to. Get a recording device for your phone and use it. Keep anything you get from the lender in the mail and keep copies of anything you send to the lender.

It can be tempting to spend the money that would normally go toward your house payment on other things, since you can’t afford the house payment anyhow. This is a really bad idea. If the lender does agree to modify the terms of your loan, they will want an upfront payment to show that you are serious. If you don’t have anything to offer them, they are going to want to know what you did with the money.

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I am asked this question everyday. Not everyone is going to have the same alternatives. However, understanding your options is the first step to saving your home and your sanity. Is a Loan Modification for me? The Making Homes Affordable Plan is President Obama’s loan modification plan that helps homeowners who are struggling to make their monthly mortgage payment stay in their homes. This plan requires lenders to reduce monthly payments to no more than 31 percent of the homeowner’s monthly income. The first step in this plan is to lower the interest rate of the loan—sometimes as low as 2%. Second, if the mortgage payment is still too high with the reduced interest, then the loan may be extended to a 40 year term. Third, if the monthly payment is still not affordable, then there may be a reduction of the principal of the loan.

Is a loan modification what you need? It is if you want to keep your home. I see loan modifications being given every day, allowing homeowners to stay in the home they have worked so hard to keep. Why do I need to defend my foreclosure with an attorney? Once you are given a complaint to foreclose, take that complaint to an attorney so legal responses can be given to the complaint. The response should be specific to each point/count made in the complaint; and affirmative defenses should be formulated for your individual case. The attorney you hire should know foreclosure law, mortgage law and how to properly prepare and answer the foreclosure complaint. If you fail to answer appropriately you risk your right to bring any affirmative defenses against the lender.

Do you need to defend against a foreclosure? If you want to save your home and your credit, the answer is yes. Even if you are working on a loan modification, are in the middle of a short sale, or simply want to avoid foreclosure on your credit you must take legal action to prevent the foreclosure process. Should I agree to a short sale and leave my home? If you want to throw the towel in or you do not qualify for a loan modification, then a short sale is a good option. A short sale is when a lender accepts less than what you owe on the property and agrees to the sale of your home. With a short sale, you need to find a realtor experienced in short sales; and an attorney who can properly negotiate the short sale with your lender. The short-sale process is similar to a loan modification and must be properly executed so as not to delay the closing and ultimately lose the interested buyer.

Should I file Bankruptcy? If so, when and which Chapter should I file? Bankruptcy is a perfectly legitimate way to stop foreclosure, put an end to lawsuits, protect paychecks from garnishment, and regain control of your financial situation. However, this should be your final option after having tried reaching a loan modification, you have defended your foreclosure with a real estate attorney and time is ticking towards the foreclosure sale date of your house. In the Chapter 7 Bankruptcy there is no loan modification option and if you stop paying your mortgage you could lose your home. In the Chapter 13 Bankruptcy you can save your house and you are given time to pay off your debt. Do not lose hope. Changes and new programs are being offered to help homeowners every day. Even though this is a time of great challenge, do not forget the true meaning of life—the love of your family, the beautiful children you may have and the beautiful place you live in. Fight for what you want, exercise, regularly, read happy books, and watch the program Funniest Home Videos. Soon you’ll be smiling again!

Do not hesitate to e-mail me at dania@fap-law.com or call me at 305-254-4492 for an appointment. The initial consultation is free so you have nothing to lose and only knowledge to gain. Dania S. Fernandez & Associates, PA 10205 South Dixie Highway, Ste. 204 Pinecrest, FL 33156 <www.daniafernandez.com>