The Home Affordable Modification Alternative
If you are not eligible for the Obama Home Affordable Modification program, than a traditional negotiated home loan mortgage modification plan would be your next choice.
Most banks will try to offer you a repayment plan as an alternative to a loan modification San Diego homeowners program.
You may need to ask your self this question- Is the Repayment Plan a solution to your problem or, Is It a Trap?
Some banks may require you to enter into a repayment plan prior to modifying your mortgage. This may be a ploy to get you to pay more money and force you into default again. This may be a temporary solution where you are just going to prolong the foreclosure process by a few months, and go back into default. you have to ask yourself if it’s worth it when you really need is a permanent mortgage modification on your home loan to make it work today and into the future. The bottom line is if they do require a repayment plan, fight them on it and articulately explain why it’s not feasible for you.
If you do enter into a Repayment Plan, ask yourself the following question:
- Are you only temporarily postponing a default by a few months? If so, is it really worth it? Maybe a short sale would be a better alternative if your lender is unwilling to negotiate. Or, you may need additional help obtaining a home loan modification San Diego homeowners program from a professional in the field.
Some Pitfals To Avoid
A Loan Modification can be a valuable tool to save your home. You must be realistic with your situation. Will you really be able to afford the new payments after the modification? Keep in mind that more than half of borrowers who secure a loan modification end up defaulting again within six months because they didn’t get a loan modification that they could ever afford. You don’t want to be a victim! Make sure you get a mortgage loan modification that is in your best interests and not your lenders interests. You need a plan that you can afford and budget for.
- If you accept a higher payment, make sure your goal is simply to convert your mortgage from an ARM or Option ARM to a fixed, and you can afford a higher payment. Don’t accept a higher
payment because your lender wants you to make up back payments and it does nothing to address your long term situation.
- Negative equity position, is it so high that it doesn’t even make sense to stay in the home? Would you be better off doing a short sale, renting and incurring a lot less stress?
- Don’t agree to unacceptable terms. Some banks will try to put you into a position in which will increase your principle, called negative amortization. You don’t want to incur a position of indebtedness that you will never be able to pay off either through the duration of the loan or by selling your home in 3 to 5 years. Keep in mind, your home probably won’t appreciate much - if at all - over the next 3 to 5 years.
- Don’t accept the first offer! Counter their offer. They’re looking after their own interests and the interests of their investors first and foremost. Keep in mind that simply because they present you with an offer, does not mean you can’t negotiate a better offer!
- Don’t let the process intimidate you. Know when to either throw in the towel or obtain the assistance of a professional.
- During the negotiation process, you can escalate your negotiation through the chain of command, even going to the very top: the VP of Loss Mitigation. Your initial point of contact unfortunately is going to be an overworked, underpaid customer service representative with little authority to make things happen.
- Don’t fall victim to a predatory loan modification company. People are out there looking to profit off your misfortune. When hiring a home loan modification San Diego company, check out references, make sure there are no unresolved complaints with the Better Business Bureau, find out who their management is, and even consider using an attorney that specializes in this field.
Do your loan modification the right way the first time around it will save you a lot of heartaches in the end.
