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Loan Modification - Get Out From Under Your Loan

Posted Tuesday, December 14, 2010

Loan Modification - How To Get Out From Your Mortgage Payment

First, the term applies to a permanent change in one or more of a borrowers existing mortgage terms. If the attempt is successful, the borrower may have his or her loan reinstated resulting in financial changes the borrower can afford. However, like the Clint Eastwood movie, there is the good, the bad and the ugly in modifying a mortgage loan. Actually, some pundits call this program the new "snake oil" of 2010. But, let's not dwell on the negative aspects of a loan modification. There are quirks in nearly every type loan a borrower is relegated to consider, so how about a peek at the good with maybe a touch of the bad.

Reasons abound why borrowers would turn to a loan modification option. Overwhelmed by a lousy interest rate or terms of his or her loan. Major life changes or sudden hardship. Loss of job. All of these conundrums can cause exegencies in a persons life. At this stage many borrowers look to find solutions, and since the term "modification" floods the radio and TV they make an attempt to find more information on the subject. Actually, it's basically a mortgage refinance except that instead of a borrower looking for a "new" loan you just simply "modify" the terms of the mortgage you're already on the hook for.

Refinancing the mortgage already in place is an option. However, for many, it's not. Due to unforseen circumstances like the ones mentioned above, the financial hardship prevents them from making not only the existing mortgage payments but the refinance payments, as well. Ergo, a modification of the existing loan takes top priority.

Finding out if you qualify is another conundrum. Much of the qualifying depends on who services the mortgage note because ultimately, the only place where you can get a modification of your existing loan is with the lender or mortgage servicer who holds the paperwork. That may not be as easy as you think. If you're into several years of payments on your loan, it could have been sold and bought and sold and bought again. This part alone is the biggest hurdle in the modification process. However, never fear. The best place to start is taking a look at your mortgage coupon book and where you mail your check.

Your eligibility will depend on a hardship, 90 days or more delinquent, owner-occupied, no bankruptcy. Caution: Modification predators exist everywhere and ask for upfront application fees of $250 to $400. Do not fall for this scam. Use common sense.