Jun 252009

One of the biggest mistakes you can make in a loan modification is to ignore the rules. Although the CJS Mortgage Modification Program does the negotiating, it helps a great deal if you do your homework and arm yourself with the right information. After all, you’re dealing with lenders-and at the end of the day; you still have to play by their rules. Here’s a list of loan modification do’s and don’ts to help you avoid common pitfalls.

Don’t wait too long.
The foreclosure process is designed so that you have time to get back on your feet and save your home. But that doesn’t mean it’s safe to put this off. The longer you wait, the harder it gets to get you out of that fix. Your situation will not get better with time or if you ignore it.

Do work with an expert.
Your loan modification doesn’t only rest in the hands of your lender, your broker, or your loan modification expert. These people can help, but you have to do your part and cooperate. Make sure to submit your paperwork on time, answer questions honestly, and give a clear picture of your financial situation.

Consider all your options.
There are some options to consider when you find yourself facing the possibility of foreclosure. If you find you’re in a situation where you want to stay in the security and comfort of your home, have fallen behind in your monthly mortgage payments due to a hardship and have a steady source of income, then a mortgage modification may be your best option.
Bankruptcy is a possible option, but only a thorough review will tell if that is the best step for you. It may be that a deed in lieu of foreclosure is your best option, but only careful review by an attorney will help you with that decision. Was your broker deceitful, did they place you in a loan you had no hope of paying? If so, you have other options that an attorney can help you with.
A Short sale is another possibility; it involves selling your home for less than its fair market value and giving the proceeds to your lender. If done properly you owe the lender nothing. But this can also be done incorrectly (usually without an attorney), and you may agree to repay the difference. Good for the lender, bad for you. Although you still lose your home, it’s not as damaging to your credit as foreclosure, so it’s easier to get back on your feet.

Do have a backup plan.
Not all people will qualify for a loan modification. Maybe you’ve fallen too far behind, your lender may be simply hard to work with, or maybe you don’t need it after all. In any case, it’s always good to have a Plan B.

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