The right kind of mortgage modification can be a true opportunity for families today.
Not all mortgage modifications are the same and the success rates have not been as high as economists had hoped. In fact, a high percentage of modified mortgages are going into ‘re-default’. The most likely group are those that did not have a change in monthly payment. Modifications that resulted in a lower monthly payment were more than twice as likely to succeed.
Let’s back up. What is mortgage modification?
Mortgage modification simply refers to the process of changing the terms of an existing mortgage. The good things about it are that the mortgage company and the actual loan itself stay the same, it is not a refinance. I guess the bad news is that sometimes the ‘modified’ loan is different from the original, but still not enough different to create an opportunity for the borrower.
Can I call my mortgage company and ask to renegotiate my loan? YES.
It might be an upleasant and/or unrewarding experience, but yes you can.
Why mortgage modification and not refinancing? Typically a lender will only consider a modification if the borrower can’t qualify for a refinance loan. Mortgage modification is typically a last resort before foreclosure.
Compared to foreclosure, any modification looks good on the surface – at least it keeps the family in the house for a while longer. In reality, if the final result is still foreclosure, even delayed foreclosure, the plan may not have been sound from the beginning.
The most successful mortgage modifications are those that are coupled with credit repair, debt reduction, and sound financial planning. There are many thousands of success stories – people who have used the modification process to save their house and create a new beginning for themselves.
Professional Mortgage Modification produces the best results and is most likely to give a mortgage with a lower payment, one critical component when a family is truly trying to succeed and get back on their feet financially. Put that together with Debt Reduction and Credit Repair and the odds of success improve dramatically because now there is a complete and balanced plan for financial success!
