When you get behind on mortgage payments – even just one payment – it’s time to take action. You should at the very least make a phone call and speak with a loss mitigation specialist about what you need to do going forward. Any good legal firm that represents homeowners will consult with you about your situation for free. The conversation should get into some depth about your situation and give you some clarity about your options going forward.

Of course, you always have the option of doing it yourself. If you insist on trying to remedy a troubled home loan on your own, be persistent and don’t back down. Lenders may try to intimidate and take advantage of the fact you don’t have representation.

Whether you choose to do this on your own or with help, the point is to get started with something.

When it comes to your home, you can’t be too cautious. Staying on top of the situation can be the difference between long, sleepless nights and a safe, secure future. If you’re sitting at home right now and thinking, “I may be in trouble, but not yet,” then you need to take action. Don’t let that first missed mortgage payment snowball into something you can’t control.

Factors for Qualifying

With programs like Making Home Affordable, the process is getting more streamlined and there are a few things we can look at to make a very good preliminary determination with regards to someone’s eligibility.

• Proof of hardship: Being able to show some kind of financial hardship is vital to your loan modification case. Lenders want to know that extenuating circumstances caused you to miss payments or have trouble affording your mortgage as it currently stands.
• Ability to pay back the modified amount. No lender will give you a modification if the numbers suggest you still can’t afford a reduced payment. Your financial worksheet that details your income and expenses tells a very important story.
• High debt to income on your mortgage payment. What you pay on your mortgage every month including taxes and insurance typically needs to exceed the level of 31% of your gross income.
• Late Payments. Like it or not, someone who has missed a payment often gets the attention of the lender first. However, it is never advised that you miss a payment on purpose.

Lenders will have their own set of guidelines as well as a few others imposed by the Making Home Affordable plan. Talk to someone knowledgeable about loan modifications and see what your options are. It can be complicated but it’s not impossible with the right amount of help.

Ways Your Loan Can Be Modified

What terms a lender will agree to largely depends on your ability to pay and what would make the most economical sense for both parties.

• Adding the delinquent balance to the loan. Rather than require payment up front, the lender may choose to add the balance owed to the new loan terms ensuring you will eventually pay it back.
• Reduce the interest rate. You’ll need to prove that a rate reduction can positively affect your situation and allow you to resume making timely payments.
• Extending the years due. By adding years to the loan, the lender is able to reduce the monthly payment knowing that they will recover the amount later on.
• Reduce the balance owed. Under some circumstances, the lender may elect to reduce the balance of the loan. To do so, they’ll want to be absolutely sure you will be able to make the new payments.

It would be one thing if this was one person who slipped through the cracks of what may otherwise be good customer service, but the truth is that it’s an all too familiar story. For a litany of reasons, banks are hard to work with on loan modifications.

As such, attorneys play an important role in the process. When you have representation, there is a different treatment associated with your file. It’s not just you, the homeowner, against the big, bad bank. Instead of spending hours and days trying to figure out what is going on, your legal representation is taking care of the problems and settling disputes.

We always welcome our prospective clients to try this on their own. Sometimes, it’s good to get a taste of the process on your own so you understand the difficulties involved. Most of our clients have the same story about trying on their own first, but you just can’t substitute the experience of a law firm that knows all the ins and outs.

However, the latest numbers through the month of September are telling a different story. In a report released January 15, the Treasury Department states that more than 110,000 modifications have been permanently offered out of about 850,000 total modifications that were started on a trial basis. Of those 110,000, 66,000 have been accepted and another 46,000 await signatures from the borrower.

Including all 850,000 modifications, borrowers “have had a median payment reduction exceeding $500.”

The department has said they have stepped up efforts to hold banks accountable and it seems to be having a positive effect.

The process itself still remains fraught with challenges, though, and some of the best results are likely reaching borrowers with third party representation. There are too many easy mistakes to fall victim to.

If you think a modification is the answer for you, somewhere between 2 and 3 million more homeowners remain eligible for the program through 2012.

We’ve often talked to homeowners about the difficulties they face with their lender when doing the modification on their own. And the long, muddled process explained in the article is probably reason number one so many people throw their hands up in the air and get representation to help battle their lender.

Some highlights from the article:

• In the beginning, the article describes a process that included “several rounds of mislaid paperwork and resubmitted forms.”
• Chase told the borrower she would not be reported to the credit agencies…she was.
• Chase approved her for a trial modification to become permanent after three on-time payments…she made 4 when no word came after three months. She eventually still got denied because of an income issue.
• After getting denied, she received a letter saying the modification was still under consideration. Then she got a call saying never mind, start over.
• She would call Chase and be told everything happening to her is common, then call again and be told it never happens.

Sounds like fun, huh? Would you believe, even with all that, a Chase spokesman said in the article that she’s better off for what the program has offered even though after a year, she’s barely any closer to a resolution?

Loan Modifications Help People

Paying your monthly mortgage payment can be difficult, especially if you have lost your job, have experienced a decrease in your income or you have had the mortgage payment adjust to a higher amount. The government and many lenders understand that it is simply too hard for some homeowners to remain in their current loans. However, if you stopped making payments or did not pay what you owed each month, the lender has no choice but to foreclose on your home. This is not what you want to see happen. Foreclosure destroys your credit and can prevent you from owning a home in the future.

A loan modification is a solution to avoiding foreclosure. It has changed the lives of thousands of people already. Imagine if you had the ability to catch up in your mortgage payments. Perhaps you would be able to pay less per month. This could mean many things for you.

• Reduce the amount of stress you are under right now. Get back to living life not worrying about money.
• Be a proud homeowner knowing that you are working towards full homeownership.
• Pay less. Why pay too much for a mortgage when you may qualify to pay less and not have any significant ding on your credit report for doing so?

How Can You Be Next?

In many situations, homeowners do quality for home loan modifications. The key is taking advantage of this offer. It is unlikely that your lender will come to you to modify your home loan, even if you start to fall behind. Rather, be proactive and take steps to modifying your mortgage into a more affordable one.

Contact a loan modification counselor directly. Find out if you qualify for a home loan. Let this company know what you need. Some homeowners just need to get caught up on payments. Other homeowners need a lower monthly payment. Since the government is offering incentives to lenders, investors and servicers who are willing to modify home loans, many people will have no problem getting into a home loan modification.

You can be part of the thousands of people getting help with their mortgage. Loan modifications can help you to remain in your home. They can help you to feel better about your financial situation and even strengthen your family. Over time, they can even help you to improve your credit and financial circumstances by helping you to avoid foreclosure. These new loan modifications can help you to be in a better place than you are right now.

Will that happen this time around? Only time will tell. But with the current loan modification options, the odds are certainly stacked in our favor.

Many hard working Americans watched, almost helplessly, as their savings began to dwindle last year. Many were forced to cash in 401k plans meant for retirement while others dusted off their resumes after corporate cutbacks and found themselves pounding the pavement looking to start their careers and their savings accounts all over again.

But help came in a big way as the government stepped in with numerous loan modification programs to help the nation save their homes in the midst of this financial crisis.

Now that the biggest wave of company closures, layoffs, and cutbacks are over, let’s take a realistic look at what our options are for “getting back on track.”

Loan Modification – A Way to Save Your Home

With the help of a qualified loan modification counselor, you can turn a financial mess into a brand new start by 2010.

President Obama’s ambitious mortgage stimulus plan is geared toward Americans who are at risk of losing their home to mortgage default or foreclosure. How does this work?

1. Making Monthly Payments Affordable

The main goal of the stimulus program is based on adjusting mortgage payments to make them realistically affordable according to the homeowner’s current income. The fact that an individual’s home has lost value or that they are upside down becomes a secondary issue. The stimulus program is based on the acknowledgment of a financial crisis. Do we want a good portion of Americans to lose their homes? Absolutely not.

2. Keeping Monthly  Mortgage Payments Low

In order to standardize what an affordable monthly mortgage payment is, mortgage lenders who are helping homeowners are adjusting payments so they will not exceed 31% of a family’s gross monthly income. There are many ways to achieve this goal, which can include lowering interest rates, extending the length of the loan, and more.

For full details on requirements for your particular state, contact a qualified mortgage loan modification consultant for your area.

3. Cash Incentives

Banks and mortgage lenders participating in the programs to help homeowners receive money from the government for every homeowner they assist. These incentives continue for up to five years, as long as the homeowner is able to make their agreed payments. This incentive plan encourages banks to realistically assess the homeowner’s financial situation and do everything possible to ensure that the rates and mortgage modification plan is feasible.

These cash incentives are not limited to the lender. The homeowner will also receive up to $1000 each year (for up to five years) for making their payments on time.

With all of these plans in place, it is very likely that one of them is right for your current situation. The sooner you call a mortgage modification consultant, the sooner you can have the stress of losing your home off of your plate and move on to a new year and a new beginning. Regardless of your level of financial hardship, call today, and begin your journey to recession recovery. You may come out even better than you were in the first place.

Since that time, the Federal Trade Commission has stepped in, working tirelessly to shut down these businesses.

After that first wave of chaos, what remains for those who still find themselves struggling to hold on to their property? Should individuals attempt to ‘go it alone’ with their current lender to try to work out a modification plan that will keep them in their homes?

The answer to that question can be tricky. While there are certain individuals who may be comfortable with real estate laws and familiar with the recent changes to loan modification programs, that scenario is certainly few and far between.

So, what’s a homeowner in need of loan modification assistance to do? Here are several tips that will help you steer clear of the scams and give you a quick summary of what’s available to you.

The Red Flags

After listening to countless stories from individuals who were taken advantage of, here is the common thread that can quickly alert you of a fraudulent company:

• Fraudulent loan modification companies are not licensed practicing attorneys or members of the State Bar, so they really have nothing to lose. They’ve set up shop on completely false pretenses. Checking credentials is the first step to a smart choice.

• Up-front fees. Large up-front fees have ranged anywhere from $500 to well over $3,500, just to get the paperwork started. Use common sense. Everyone is in business to make money and support their own families, but paying large sums of money before any work has even begun is a huge red flag.

• Telemarketing type calls. There have been numerous reports of telemarketing pools cold-calling potential clients. They find the names of individuals in pre-foreclosure and repeatedly call, making promises of reduced payments and saving your home.  Many, in desperate situations, afraid of losing their home have fallen for these scams. The truth is that no one can promise to lower your payments before all of your income information has been presented and your mortgage lender has been contacted. Any company making these blanket promises should be avoided.

As with any type of purchase or financial decision, caution and common sense should be used. There are shady used car salesmen and there are dishonest, self-proclaimed loan modification “experts.” But don’t allow a fear of fraudulent companies keep you away from the government programs and loan modifications that are available to you.

The Real Deal

Now is the best time to obtain representation and work out a plan of action with a legitimate loan modification company. The Making Home Affordable Program, part of the Obama Administration’s strategy to get the economy and the housing market back on track offers refinancing through the Home Affordable Refinance Program (HARP), and there are numerous mortgage modification scenarios available through the Home Affordable Modification Program (HAMP).

Each program has state specific qualifications and rules, which include income, time of home purchase, total home price, etc. By acting now, you can benefit from a reduced interest rate, an extended loan period, debt forgiveness, or a combination of these and other loan modification methods.

If you’ve recently experienced a change in your level of income, or a higher interest rate has kicked in on your mortgage payment, there is help. Foreclosure does not have to be a part of your future.

Don’t make the mistake of waiting. There are many more options available to those who act quickly when trouble arises. Face your fears and educate yourself about the two big questions you must face:

What kind of options are available to you and who can you trust to guide you in the right direction?

Let’s look at the second question first. The best way to receive the help you need is by working with a loan modification professional. There are countless stories of individuals trying to “do-it-themselves” by contacting  government programs, filling out endless paperwork and making absolutely no progress in the end. Still others have paid unscrupulous mortgage brokers large up-front fees based on false promises and end up losing everything. Because of the recent changes in the economy, self-proclaimed mortgage experts have cropped up on every corner, much to the dismay of many trusting individuals who did not receive the help that they deserved.

Red Flags

When looking for help with mortgage problems, beware of anyone who asks for up-front fees to help you stay in your home. Real help should include a careful assessment of your personal financial situation, discussing the options that are available to you, and efficient, timely representation between you and your lender.

This can only be accomplished by legal professionals who specialize in the mortgage and real estate industry. Be careful of anyone who is new to the industry and is not a legal professional.

What are the Options?

Now that you’ve learned how to spot the scammers, you still need to know if there are actually options that can help you stay in your home. At the present time there are numerous options available to homeowners who are experiencing a financial hardship. The sooner you contact a loan mitigation specialist and discuss your situation, the better off you will be.

Contrary to popular belief, most lenders would rather keep you in your home than go through the additional paperwork, time, and expense of the foreclosure and resale process. That is why acting early is so valuable.

You may qualify for any of the following solutions:

• Reduced or deferred monthly payments
• Debt forgiveness
• An extension on the length of your home loan
• A lower interest rate
• The conversion of an adjustable rate (ARM) loan to a fixed rate
• Or a combination of any of the above modifications

With each of these options, there are pros and cons, paperwork, legalities, and a negotiation process. If you deal directly with your lender yourself, you may not be made aware of all of the options that are available to you. The reason for this is simply because your lender is looking out for their best interests. That is why a representative, who is familiar with all of the modification guidelines and options is such an asset to you.

Don’t wait another day. If you are having trouble making your mortgage payment, a loan modification can be just the answer you were looking for.