Saturday, April 2, 2011


First call a FREE HUD Counselor: 1.888.995.4673

If you are financially distressed or in danger of getting behind on your mortgage payments, you may be able to obtain free counseling from a HUD approved counseling agency. They offer a basic advisory service to consumers. The counselor will schedule a phone appointment and ask you to assemble your financial and mortgage documents prior to the call. Ask lots of questions and write down their answers. If this person suggests you 'may qualify' this does not mean you are 'approved'. Getting approved can take many months.

What IS Loan Modification?
A loan modification is basically reworking your existing loan with your current bank or ‘servicer’ to new terms you can afford. In many instances, modification may result in a temporary lowering of your interest rate. But first, you must demonstrate financial hardship and an ability to make a lower payment. Lenders have their own rules so your advocate needs to know what they consider acceptable.

Your bank may steer you away from hiring an advocate because, frankly it's in their interest to have you to themselves. However, you may choose to work with a non profit agency, an attorney or licensed loan officer. Any paid modification agent should be licensed to practice in your home state.

How Can You Avoid Foreclosure?
There are many strategies you may be advised to consider if you don't qualify for Loan Modification. A Bankruptcy Attorney, qualified Short Sale Agent or Accountant may need to be consulted about your best options.

To WHOM Do You Apply for Help?
Your bank (the name on your mortgage statement) is the servicer of your loan. They represent the investor who holds your loan in their portfolio. The servicer is paid by the investor to keep your loan ‘performing’. It is in their interest to explore options to keep you in your home. They really don't want your home back. They want a performing loan.

An advocate may intervene on your behalf with your lender after assessing your most likely options. In addition to HAMP, HARP and MHA federal programs, many banks have their own private programs.

Advocate Agents
During the modification process if you hire an advocate, they need you to regularly update your income documents to build your case with your lender. They will petition your lender for an agreement that serves all parties. They will help explore every option open to you. An experienced advocate will know the lending guidelines and specific concerns of your lender as well as which program to apply to your situation. Unfortunately, your average consumer has very little ability to navigate this turf on their own.

Apply for Help
For every situation there is a different potential result depending on you and your lender. The key is success is to keep communicating with your lender to find a resolution within your means.

Choosing an Advocate
We know how important your home is to you. By understanding your situation, an expert advocate may help you find a mutually acceptable plan of action. In the State of Washington, besides free HUD counselors, only legitimate Licensed Attorneys or Licensed Loan Officers may represent you for a fee. They represent your case to your lender. The goal is to prevent foreclosure and empower you to avoid financial distress.

Most lenders offer free financial review to explore your potential finance options. Lenders are not always the best advocates, so do your homework.
Assessing Your Options:
After your review, if a mortgage solution is not possible, a good lender may refer you to a trusted advocate or attorney who are expert in this arena*.

Get Accurate Information and Develop a Plan Going In:
Read our posts on rebuilding credit after modification, short sale or foreclosure.

Don’t Wait Until It’s Too Late!
Don’t wait until you have exhausted your resources before seeking help. You are not required you to miss a payment before you apply for modification. Your lender is not going to be very motivated to help you if you cannot also help yourself.

Help Your Advocate Help You!
It will be difficult to succeed if you are unable to participate. Applyng for a loan modification involves verifying your actual financial position throughout the application process. The process relies on your full participation. Be patient and consistently support the effort.

To your success!

© 2011 susan templeton
Susan Templeton is not a loan modification advocate