Understanding Mortgage Modification Guidelines By Debunking The Myths
A mortgage modification is an ongoing change to an existing loan terms in order to better accommodate the borrower and avoid foreclosure. This modification is a big change to both the lender and the borrower, hopefully to avoid any future mortgage mishaps. During this process, understanding mortgage modification guidelines are necessary to aiding the process along.
Here are the top myths of mortgage modifications according to Moe Bedard, mortgage modification guru.
Myth 1: Non-profit mortgage modifications groups, and like organizations are available to protect a homeowners best interest.
Where groups like Hope Now and 995-HOPE are not bad organizations or will do more harm than good they are often superficial in their assistance. These groups will often not dig deep. They have one focus income levels, not legalities of loan contracts. Legal issues such as loan contracts will actually have them stuck in the court system, which these companies would rather avoid with quick, fast loan fixes.
Myth 2: Lenders are willing to offer principal reductions on mortgage balances when the loan is more than what the home is worth.
Even though this can happen, it rarely does. When it does occur, generally there is a first and a second mortgage. The second mortgage is usually negotiated down from its original loan amount to about 15 cents on the dollar. If everyone was able to call into their mortgage company and have their mortgage reduced just because they were a little tight on budget, this would devastate the economy more. With the overall downturn in the economy, this would eventually just crush the entire mortgage market.
Myth 3: Lenders are being proactive and helping homeowners everyway they can.
This is not true. The longer they hold out, the more money they are making. Modifications save foreclosures, but do deplete the over all profits made by the mortgage lender. The lenders should have been more proactive during the initial lending process to avoid the current issues homeowners are experiencing including mass foreclosures due to inability to pay primary loans.
Here are the top myths of mortgage modifications according to Moe Bedard, mortgage modification guru.
Myth 1: Non-profit mortgage modifications groups, and like organizations are available to protect a homeowners best interest.
Where groups like Hope Now and 995-HOPE are not bad organizations or will do more harm than good they are often superficial in their assistance. These groups will often not dig deep. They have one focus income levels, not legalities of loan contracts. Legal issues such as loan contracts will actually have them stuck in the court system, which these companies would rather avoid with quick, fast loan fixes.
Myth 2: Lenders are willing to offer principal reductions on mortgage balances when the loan is more than what the home is worth.
Even though this can happen, it rarely does. When it does occur, generally there is a first and a second mortgage. The second mortgage is usually negotiated down from its original loan amount to about 15 cents on the dollar. If everyone was able to call into their mortgage company and have their mortgage reduced just because they were a little tight on budget, this would devastate the economy more. With the overall downturn in the economy, this would eventually just crush the entire mortgage market.
Myth 3: Lenders are being proactive and helping homeowners everyway they can.
This is not true. The longer they hold out, the more money they are making. Modifications save foreclosures, but do deplete the over all profits made by the mortgage lender. The lenders should have been more proactive during the initial lending process to avoid the current issues homeowners are experiencing including mass foreclosures due to inability to pay primary loans.