FAQs

A loan modification is much like a mortgage refinance in that the objective is to find you a more affordable mortgage payment for your financial situation. In fact, it is often called a modified refinance. The primary difference is that instead of looking for a "new" loan you will just simply "modify" the terms of your existing mortgage.

Refinancing your existing mortgage to obtain a more affordable mortgage payment could still be an option. Unfortunately, for an increasing percentage of homeowners it is not. That is precisely what loan modifications are for, the homeowner that has incurred a financial hardship that prevents other mortgage financing or payment options.

In most cases, a loan modification is recommended to homeowners that have a financial hardship that is preventing them from making their monthly mortgage payments. Most homeowners eligible for these types of mortgage modification programs have already missed one or more payments.

Simply because it is in the best interest of the bank. As you attempt to inquire about a loan modification do not confuse this transaction with an altruistic act of kindness. It is fundamentally a transaction that makes more business sense than the alternative--you defaulting on the entire mortgage and costly foreclosure proceedings.

It is also a product of the current economic conditions. There are so many homeowners that have been pinched by the simultaneous collapse of the housing market and the economy. This creates a unique circumstance.  Modifying your mortgage to keep you in your home, benefits the bigger economic picture.

Some homeowners are attempting to renegotiate directly with their lenders without assistance. But many more are turning to reputable "loss mitigation" companies who provide professional assistance to the renegotiating homeowner for a fee.

Why should a homeowner pay a loss mitigation company for assistance in keeping his most valuable asset? We might just as well challenge payment to a specialist for tax preparation assistance or payment to a golf pro. To cope in today's modern world, the average American requires the assistance of a multitude of different specialists.

There are many legitimate reasons why a homeowner would reasonably pay for the assistance of a loss mitigation company. First of all, there is a basic conflict of interest that a lending institution faces when dealing directly with a homeowner. It (the financial institution) has a fiduciary, binding legal duty to obtain the best terms possible - not for the homeowner - but for its shareholders! It would be sued if it didn't!

And how is the individual homeowner to know what the best and most reasonable terms are possible to obtain from that institution? And how is the average homeowner to know what facts pertinent to his situation are most likely to result in an advantageous agreement? Only the expertise of the experienced and reputable loss mitigation company can supply the homeowner with these facts.

In conclusion, loss mitigation companies are providing Americans with a vital and necessary service. As they say, the proof is in the pudding. It is the miracle of the free market that loss mitigation companies have had the clairvoyance to detect and respond to the urgent need of consumers to retain their most valuable asset.