When Should You Seek a Loan Modification

Posted by admin on Feb 9, 2009

With foreclosure figures going up, homeowners are looking for ways to save their homes. Foreclosure solutions that worked before do not seem to work anymore. A better way of stopping foreclosure is what Americans need.

For many who successfully saved their homes from foreclosure, the solution came from loan modification. And word is spreading fast on how effective loan modification is in saving homes from foreclosure.

Within the housing industry, loan modification is now considered a household term. Yet there are still questions that homeowners need answers to about loan modification. One of these questions is when should a homeowner seek a loan modification.

Since loan modification is widely viewed as a foreclosure solution or one of the loss mitigation options, some misconceptions arise when it comes to the question as to when a homeowner should seek a loan modification. Some believe that you cannot qualify for loan modification until you are behind in your mortgage payment.

The truth is, even if you are on time on your mortgage payment, you can still put in a request for a loan modification. In most cases, having a good payment history places you in a better position when asking for a loan modification.

While it is true that being behind on your mortgage payment is a good reason for asking for a loan modification, you do not have to intentionally skip payments just to qualify. There are plenty of other good reasons to seek a loan modification. These reasons are what are referred to as “hardships.” Hardships include financial problems due to loss of job, expensive medical procedures due to illness or accident within the family, divorce, or death.

Other reasons for seeking loan modification are those that are “technical” in nature. Real estate lawyers believe that most homeowners have in their hands contracts that have unjust terms against them. These contract terms can be used in favor of the homeowner in seeking a loan modification. By letting a loan modification specialist or loss mitigation lawyer examine your contract, he or she may easily find these unjust terms as they are commonly included in every mortgage contract. Most of these unjust terms are contrary to existing laws that cover the legal conduct of your lender’s business. By doing so, it is now the law against your lender. In most cases, this will expedite the approval of your application for a loan modification.