What is a Loan Modification?

Loan modification may sometimes be the only solution to help burdened homeowners who simply cannot catch up on their mortgage payments. Many times, these homeowners are unable to qualify for a complete refinance of their loan. Loan modification, on the other hand, is simply an appeal to the current lender to alter the conditions of the present mortgage. By lowering the current rate, waiving a percentage of the loan balance or late fees, or simply modifying the length of the loan, the mortgage company has the ability to make the loan more reasonable to the homeowner's present financial condition. The borrower is able to keep making payments and the mortgage company is not compelled to foreclose.

It is rapidly becoming one of the most utilized methods to help homeowners avoid losing their homes to foreclosure. Not too long ago, the homeowner was only able to take advantage of loan modification just prior to foreclosure. However, it is increasingly being used before the borrower even gets behind on a single payment.

When a homeowner goes through the "refinance" process, they are faced with numerous fees, including appraisals, taxes, legal expenses, surveys, and closing fees, that only increase the burden on their financial position. During the loan "modification" process, the current mortgage is simply altered to create a payment that is more affordable to the borrower. This is typically achieved by changing the adjustable interest rate to a fixed number. Loan modification gives a much needed life line to borrowers who simply cannot afford to refinance, but have the ability to make a payment that is more appropriate to their income ratio. In this case, lenders are eager to reach more appropriate terms for the borrower. In the long run, it saves everyone money. United Processing Center will speak to the lender on behalf of the borrower and demonstrate the advantages in favor of the lender to grant a modification of the loan terms. Once they realize the benefits to be gained by simply changing some of the loan terms, they are willing to adjust the interest rate lower or find other methods to reduce the monthly payment due from the borrower. Mortgage companies do not want to own your home and are thus agreeable to helping the homeowner reach terms to keep the foreclosure process at bay.

Do I really need have a service provide this negotiation process for me? Will I be able to achieve results by speaking with the lender directly?

There is always the option of representing yourself in any matter-- whether it be legally or financially. Anyone that is experienced or educated enough regarding mortgage terms and conditions of default, or simply confident enough in their ability to negotiate and reach agreeable terms with their lender can consider discussing loan modification with their lender.

If you aren't feeling very confident about your bargaining abilities, or terms like "loan modification", "special forbearance" or "partial claim" do not have much meaning to you, considering a trusted and knowledgeable service to handle your mortgage company will be a wise decision. There's a good chance the customer service representatives at the bank will not take your request seriously or toss you around in the system in an endless circle. Most homeowners are not familiar enough with the process to know whether they are being jerked around by someone trying to meet monthly sales goals or treated as the respectable customer trying to make things right.

If the mortgage company informs you that they are unable to help you, will you simply give up your fight or will you challenge the authority of the service representative that brushed you off to the side? Most of the representatives in the first line of contact are very inexperienced. These aren't the representatives you see when you walk into a bank, sitting in their own luxurious office with a personal secretary. The fact is that these jobs do not pay very well, with workers constantly coming and going from employment and tightly packed into high volume call centers. The agents working for United Processing Center are experienced and well informed of the mortgage business, which is much more than can be said of any of the mortgage company's representatives. How well do you think you will be able to push through the red tape of confusion they throw at you?

A person's home is one of the most important assets ever owned by the vast majority of Americans. When the home is purchased, the buyer consults real estate agents, attorneys, accountants, and lenders to finalize the process and ensure everything is done correctly and legally. Don't you think the same type of advice is needed when trying to negotiate the retention of your most important asset? Not only will you be assured that the job was done in the best manner possible, but you will save yourself much undue stress, time, and most importantly, money. Is it in the mortgage company's best interest to seize my home through foreclosure?

The assuring fact is that foreclosure is usually the last thing a mortgage company wants to do. If the property has reached the point of foreclosure, the bank has already lost money on the property. Once they take ownership, they must incur taxes, insurance, and other expenses that ultimately put them in the red even more. There is very little downside for the mortgage company to take whatever steps needed to thwart the foreclosure process.

What is not so assuring is that you are just one of thousands or millions that they service with a loan. You have no real identity to them other than your loan number. Their ultimate concern is their profit, not making sure you have a place to sleep at night. That's not to degrade your lender; unfortunately, it's just the facts. Even though keeping you out of the foreclosure process ultimately works in their favor, that does not mean they will bow to your whims. Largely due to current skyrocketing foreclosure rates, mortgage companies own a vast share of real estate in the market, which does provide leverage on their end.

Are there other alternatives available to help me avoid foreclosure?

There are two other possibilities to take into account before making a final decision about loan modification. Both of these options- deed in lieu of foreclosure and short sale-- require that the homeowner currently be in default of their mortgage.

Short Sale of Property:

If the property owner is able to sell the property at a lower amount that they currently owe on the mortgage, the mortgage company may be open to a taking less than is owed and release their lien on the property for that lower amount. This process is termed a short sale. The homeowner is not indebted to pay the mortgage company the rest of the money that would have otherwise been due.

Let's assume that a homeowner still owes $120,000 on their loan, but can only secure a buyer for $110,000 due to the drastic fall in real estate prices. A mortgage company could be open to allowing the homeowner to satisfy the loan with a $110,000 payoff, rather than risking further delinquency and incurring expenses on a $120,000 foreclosure.

Deed in Lieu of Foreclosure (also known as Deed in Lieu, or DIL)

When a homeowner voluntarily opts to deed their property to a mortgage company in order to be liberated from the terms of the loan, it is called a Deed in Lieu. In some cases, the mortgage company will elect a "Cash For Keys" option, which will provide cash to you in exchange for the deed to them. However, the only way that a DIL can be used is if the mortgage payments are financially impossible for the homeowner to make.

If any of these options appeal to your current financial condition and mortgage status, our team of legal experts can walk you through the process and help you reach the best terms possible, whether its for a deed in lieu of foreclose, a short sale, or a loan modification.

How extensive of a service will I receive from UPC?

We will do whatever it takes to mitigate your possible foreclosure, including orchestrating a short sale, deed in lieu, or loan modification. If you need further assistance to get back on your feet, we also provide debt settlement services.

By submitting this contact request, you are consenting to be contacted by foreclosure consultants by telephone or email, even if you have previously listed yourself on any state or federal Do-Not-Call List. We take your privacy very seriously and we will never sell, rent or otherwise distribute the information you submit on our website. You can rest assured that your personal information, including your email address, will be kept in strict confidence.