Who Needs a Loan Modification?

by tammy on March 1, 2010

There are many, many factors that go into deciding who is truly in need of a loan modification. Even then, unfortunately, some of the people who are in need will not qualify for a loan modification. While the process of obtaining a loan modification may seem simple at first, it is actually a very in depth procedure that requires a lot of planning and knowledge on the part of the borrower.

Before a borrower even attempts to approach his lender or a third party organization to obtain a loan modification, he or she should exhaust all other options. For many, budgeting money, cutting back on personal or unnecessary spending, and cutting out or delaying other bills may be the best answer. Many people try to get a loan modification while making expensive car payments or paying for small luxuries such as vacations, cable television, or wireless internet. These things can quickly add up and leave one more financially burdened than he or she may realize. If these individuals would simply opt for a less expensive car or go without a few luxury items, they might find they are able to make mortgage payments without the help of a loan modification. Talking to lenders and trying to work out unofficial payment schedules or some other type of agreement is another good option. If, however, one has stripped away all unnecessary expenses and finds that he or she is still unable to meet the demands of the mortgage, then he or she should consider a loan modification.

If one has come to the realization that loan modification is the best option, he or she should first speak with a financial professional or an attorney, if possible. After this has been done or after one has obtained all of his or her financial information, including valid proof of why the terms of the loan cannot be met, then he or she should speak with the mitigations department or home retention department at his or her lender’s institution. Often times, one will be able to work out the details or at least get the ball rolling on the process through a simple phone conversation, providing that he or she is adequately prepared and polite.

If this does not work, finding a qualified third-party company or a non-profit debt management organization may be the answer one is looking for. One should be careful to do proper background research on any organization or individual he or she employs to help with the process. Some of these companies exist only to exhort money from their clientele and can leave borrowers in even more of a predicament than they originally were.

Proper help and knowledge about one’s financial state and about the loan modification process are truly the best tools one can be armed with. There is always a way out of debt, whether it be loan modification or another option, but one must be persistent and use good discretion in the pursuit of it. 

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