Apr 132009

One million families will face losing their homes to foreclosure this year. One out of every 440 homes received a foreclosure filing in February of 2009. In Las Vegas, NV, one in 60 homes received a foreclosure filing in February of this year. In Florida, second to California for foreclosures in the country, the number of foreclosures since January of 2009 has increased by 14%.

A possible solution which could save the home and a family’s security may be a mortgage loan modification. A mortgage loan modification is a renegotiation of the loan terms with the lender or servicer.

To qualify for a mortgage loan modification, the homeowner needs to have suffered a hardship. A hardship can occur due to a rate change on a loan, a personal matter such as a divorce, job change, illness or disability or it may even be that the buyer was placed into a lona that they could never could afford by an unscrupulous broker. The purpose of a loan modification is to help make the monthly loan payments more affordable. Usually it is in the form of a rate reduction and fixing the rate for a certain amount of time. It may even include an interest only period or reduction in the principal amount owned.

In the past, a refinance was an option, but with the declining market and tight underwriting requirements, that is not usually an option. Now the banks and servicers realize they must work with homeowners for a loan modification. A loan modification does not require “closing costs” like a refinance option; it’s a restructuring of a current loan. Also, lenders do not want to own homes. Studies show that lenders lose fifty (50%) of the value of your mortgage in a foreclosure. Also, recently announced government sponsored incentive programs make loan modification a sensible and attractive option for lenders and a solution for home owners.

The price of residential real estate has fallen significantly. In some areas of the country, prices have fallen more than 30%. Many homes are actually worth less than the loans that were made on them. Foreclosing on this unprecedented volume of real estate is both time consuming and expensive for lenders.

Under these very unusual circumstances, lenders are beginning to realize that it makes a lot of sense for them to try to work with the current homeowner. Ironically, modifying the loan terms to make the loan affordable to the current homeowner can save the lender many thousands of dollars. The important thing to realize is that at this stage, anything that the lender is willing to do is voluntary. The lender does not have to modify the loan terms! If it were not for the unique environment we are experiencing, it is unlikely that the lender would modify loan terms at all, but mortgage loan modifications are being negotiated all over the country and helping families to remain in their homes.

If you’d like to see if you qualify for a mortgage loan modification, the Certified Credit Consultants (CCC) of Credit Justice Services can help. Contact a local CCC today and ask about how easy it is to apply today to get on the road to recovery.

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