Bankruptcy

You don?t have to be in arrears to modify your mortgage

By Attorney Goldstein

     The general rule of thumb is that no one is going to renegotiate a contact of any sort unless it is advantageous to them. What I mean by this is that if it is not in your bank?s interest to modify your loan, then why should they? As a result of this theory, many people who do not truly understand how the Federal loan modification programs work or how many of the private mortgage workouts are set up, will tell you that you need to miss at least a few mortgage payments before anyone will even consider you for a modification.    

    This is simply not true. If you can avoid falling behind on your payments, without causing any undue suffering for your family, such as not being able to pay your utility or grocery bills, your best bet is to keep your mortgage payments current. As soon as your start missing payments by more then thirty ?30? days, your credit score will start to decline. For this very reason, the government has added the specific language of ?immanent default? to those homeowners who could be helped by a loan modification. More importantly, the investor is looking at a situation of not simply have you already stopped paying your mortgage, but if nothing changes will you be able to continue paying your mortgage. Additionally, there are actually incentives to the banks that choose to modify home owners who are current, by providing a financial contribution from the government. For more information on incentives, check out the Making home affordable press release.

     The key to a successful loan modification is not necessarily to be delinquent, but rather to be proactive. Talk to your lender before you get to the situation where you have already missed several payments and may not be able to catch up without help.

Full post as published by Bankruptcy Articles & Blog on May 10, 2010 (boomark / email).