Loan Modification Do’s and Don’ts
Earlier this week, I released my Top 5 Do’s and Don’ts when considering Loan Modification:
#1. Do tell your spouse or significant other: It’s tempting to hide bad news from your partner, but this can actually work against you. For example, in most cases, you cannot legally negotiate a loan modification without your spouse. You and your partner are in this together and are stronger as a team. Regardless of the reason, disclose it to your partner, put it behind you, and work together to resolve the crisis.
#2. Don’t assume it’s too late to act: As long as you are still residing in your home, you have opportunities to keep your home.
#3. Do realize that your lender wants to resolve the issue: The only way your lender makes money is if their loans perform—modifying a loan through loan modification makes it perform for the lender. Banks and other lending institutions make more money and lose less money if you can make your payments. When they foreclose, they not only lose your monthly payments, they also have the expense of foreclosing (attorney fees), rehabbing the home, and then selling it (agent commissions).
#4. Don’t go into hiding: As hard as it is, failing to pick up the phone, return phone calls, or respond to notices is one of the worst things you can do. Your lender needs to know from you or your legal representative that you are aware of the delinquent payments and are working on a solution.
#5. Do seek professional representation: You may be able to negotiate a loan modification yourself by working directly with your lender, but an experienced attorney or loan modification expert can properly represent your case to your lender and make sure your loan is modified to a level of affordability. Homeowners who represent themselves often overestimate what they can afford to pay and end up in the same situation months after they receive their modification. Working with an attorney helps you reduce the likelihood of making the same mistake twice.
Ralph R. Roberts, GRI, CRS