What is a loan modification?
A loan modification is a fixed and permanent change to one or more terms of a mortgage, resulting in more favorable interest rate and payment requirements for the borrower.
Is it different from "refinancing"?
Yes, refinancing a home loan requires the expenditure of closing costs, appraisal fees, origination, documentation and other junk fees. A modification simply changes the rate and mortgage payments of your existing loan.
Do I need an attorney?
In order to consummate a modification, you have to have a willing lender. Loss mitigation divisions of banks have their hands full with the downward spiraling real estate market and distressed properties. You will have a much better chance of getting the attention of a bank representative if you are represented by an attorney. Most lending institutions won't even talk to you until you're two or three months delinquent in payments, at which point it's often too late to salvage the home. Going it alone or enlisting one of the many "loan modification mills" proliferating throughout the internet are a far inferior means to a desirable end.
How does predatory lending fit into the equation?
If you are a victim of unfair lending practices, whether perceived or actual, an attorney can use that as leverage in negotiating a modification. An attorney mortgage refinancing what predatory lending is and will be able to identify evidence of it in your loan documents. He or she also knows what the applicable penalties are.
For instance, in many states, including Nevada, an unscrupulous lender may be liable to the borrower in an amount equal to the sum of three times the amount of any actual damages sustained by the borrower, plus the borrower's attorney's fees. A lender may also be forced to forfeit interest, disgorge interest previously paid or even suffer cancellation of its deed of trust.
What if I can't afford to refinancing mortgage an attorney?
In skillfully negotiating a loan modification, all terms are on the table and actual attorney's fees paid may be capitalized into the modified principal balance.
Garrett Sutton, Esq. is a corporate attorney and is the author of "Own Your Own Corporation" and other titles in the Rich Dad Advisor series. His firm forms and maintains corporations, LLCs and other entities and may be reached at http://www.corporatedirect.com
To get a FREE copy of Garrett's book, "What to Know Before you Incorporate" log onto http://www.corporatedirect.com
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