Mortgage Modification Loan - Busting the Myths Behind the Guidelines

A mortgage modification loan (sometimes known as loan modification or known as mortgage modification) is essentially an adjustment in the terms of your existing loan in order that the monthly payments become manageable. The result should be that the borrower is then able to continue making a monthly payment, even if it is smaller and thus avoid losing their home to foreclosure. This is a huge process for both the borrower and lender alike and in order for the process to run as smoothly as possible, the borrower should have an understanding of the process.

Mortgage modification specialist, Moe Bedard, has released information designed to bust the most common mortgage modification loan myths:

1: A homeowner's best interests will be maintained by non-profit mortgage modification groups.

This is not strictly correct. Groups such as Hope Now and 995-Hope are very helpful organisations in so much as they offer great advice. However, their assistance, according to Bedard, is 'superficial'. By this what we mean is that they would prefer not to delve into legalities too deeply. These organisations do not want to be stuck in the court process and, as such, would rather resolve issues with fast fixes, which is not always idea.

2: If your outstanding loan is more than what your house is worth, a lender will assist by reducing the principal.

It would be extremely unlikely for this to be the case. And in cases where this is offered, there is usually a first and second mortgage and it is usually the second mortgage that has its principal reduced by around 15%. While everyone wishes they could just call their lender and have their mortgage reduced, if this were the case, the economy would be thrown into further turmoil

3: Lenders are proactively seeking to help homeowners in all ways possible

This really is not the case. While offering a mortgage modification loan is a more profitable option for the lender than foreclosure, reducing your monthly payment in any way does reduce their overall profit. So the more the lender can put off having to reduce your payments, the better it is for them.