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The Pros & Cons of the Federal Mortgage Loan Modification Program

By: gracepub

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If you find yourself having difficulty keeping up with your mortgage payments and you don't want to lose your home, then President Obama's loan modification program may be for you. This program is helping homeowners avoid foreclosure. Here are some things to consider when deciding if this program is right for you.

Pro: You don't need to be delinquent in your payments in order to apply for a loan modification.

Con: You will need to show proof of financial hardship now or in the near future.

Lenders are paid extra incentives under the loan modification program for offering a loan modification option to their clients who are not yet delinquent, but who face looming financial problems. Proof of hardship can include a significant increase in your mortgage payment or a significant reduction in your income. You will need to provide documentation such as pay stubs, tax returns, other proof of earnings, credit card balances, auto loans, student loans and any other debt you may be carrying.

You also need to compose a hardship letter that succinctly sets forth the circumstances causing your hardship and why you need or deserve a loan modification to stave off foreclosure. An apt description of your application package is that the hardship letter is the lead singer in your application for loan modification and the financial records submitted are the backup vocals. The package must be complete or the song will not be bought by the lender.

Pro: The government is offering economic incentives to mortgage holders and lenders who offer the loan modification program to borrowers.

Con: Some of these mortgage lenders and holders really don't want to provide borrowers with information regarding the loan modification option and sometimes give conflicting information to their clients.

You may not want to depend solely on your lender for a complete picture of the loan modification process. You can hire third parties who specialize in preparing you for the loan modification process or you can purchase a do it yourself loan modification kit that provides you with detailed information, including terminology, to ensure that you understand the process. Loan modification kits also include guidance with record keeping so that you can keep track of all the paperwork yourself. Unfortunately, some lenders and mortgage holders lose paperwork that you provide during the loan modification process and should this occur, you will have your documentation right at your fingertips, ready for resubmission. A loan modification kit also provides you with the tools you need to reach the right people for processing your application, such as the 800 number for your lender's loss mitigation department.

Pro: The mortgage loan modification program doesn't cost anything.

Con: There are companies out there promising to get your loan modified. Some charge thousands of dollars for their "services" with no guarantee that your loan will be modified.

There is no charge for the federal loan modification program. However, as pointed out above, you may want to consider the services of a third party for the application process or purchase a do it yourself loan modification kit to assist you through the application process. If you take this route, do research these companies to avoid unscrupulous scams that only wish to take your money. Purchase the services or kit from a reputable company and the assistance this brings you in invaluable. Last, but not least, regardless of which loan modification solution you go with, there is never a guarantee that a loan modification will be approved because that decision rests solely with the lender.

Pro: A loan modification will help you manage and decrease your debts.

Con: If your household debts are more than 55% of your income, you must agree to go for credit counseling.

If you are successful in a loan modification, you will have the peace of mind that not only is your homeownership secured, but also your payments have been restructured into an affordable schedule within your current to foreseeable future means. Whether you choose to go the route of the federal mortgage loan modification program with or without additional third party assistance, credit counseling is not necessarily a bad thing. In fact, most third party companies and do it yourself loan modification kits contain resources to help you improve your financial situation, i.e., bankruptcy attorneys, debt settlement and credit repair services. There are also instructions for reducing your property tax and homeowners insurance premiums. These resources, in whatever forum you get them, will help you continue to improve your financial situation and credit after you get your loan modification.

Article Source: http://depositarticles.com/

Hit by the government changes to Loan Modifications,LoanModStarterKit is offering advice and help for homeowners hit by the changing regulations in the Loan Mod World. www.loanmodstarterkit.com

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