How to Get Started on Applying For the Loan Modification Process

Loan modification may be just what many home owners are looking for. A lot of home owners are behind on their mortgage payments. Some may only be behind 30 days. But 30 days can become 60 days or 90 days very quickly.

And then the bank starts sending the dreaded notices that if the payments are not brought current, they will begin foreclosure proceedings. The home owner begins feeling trapped and has no clue where to go or what to do. Let's see what loan modification is and how do you begin.

What is loan or mortgage modification? Loan modification means that the house loan is going to be changed so that the home owners can afford the payments better. This can involve adjusting the interest rate, the duration of the loan or other factors. Circumstances around each mortgage modification determine what modifications to the loan can be made.

If the rate of a mortgage has jumped because it is adjustable, then one option would be to make the rate fixed. If the home owners has been out of work for a long time but now has a job, then the amount that is past due may be absorbed back into the loan.

Now how do you begin? The first factor of how to start is when. With the current government programs, it is often best for the home owners to contact their bank as soon as there is trouble. Some lenders will wait until you are 30 days behind before they want to talk. But it never hurts to try sooner.

Another thing you need to do is find out who actually holds the mortgage on your house. Just because you make your checks out to ABC Company does not mean they actually own the loan. They may simply be the mortgage servicer. Call the company and ask for paperwork on who actually owns the loan.

How do you bring your personal situation home to the bank? Write a letter explaining how you simply got to this point. Again, be honest. In a brief concise letter, explain the full chain of events that has led you to this point.

And make sure who ever you are talking to is the correct person. You need to be speaking with someone in loss mitigation, not collections. Collectors are there to hound people into paying. Loss mitigation is there to help decrease or prevent losses for the company. Be patient. What has taken you months to get into is not going to be corrected and resolved in a day or two. Maintain contact with the person you are working with, but keep your cool.

And at the end of the day, be realistic. You are in a deep hole before you get to the point of loan modification. The hole may be deeper than the mortgage company is willing to help you out of. But keep pressing. If one person says no, another may say yes.