Loan Modification: Why You Don’t Want to Attempt It on Your Own

My, how time flies when times are good. It seems just like yesterday that you got a great opening rate on your mortgage. You negotiated an amazing deal on your house, and maybe have even taken advantage of equity from when the housing prices were on a steep rise. But if those good times have ended — perhaps from an interest rate reset on an ARM, loss of income due to a down economy, or loss of equity resulting from lost value on your home — then you might be struggling just to keep up, have already started missing payments, or worse, have entered foreclosure.

If you’re in a position where you are worried about losing your home or getting so far behind on your payments that you won’t be able to dig your way out, then you might want to consider turning to loan modification.

How Do I Take Advantage of Loan Modification?

Modifying your loan is as easy as calling your bank and asking for new terms, right? Sure, if you know the ins and outs of loan modification law and have plenty of experience negotiating with lenders. Renegotiating your mortgage with a bank is not as simple as it may seem.

Unlike haggling over the price of a car at your local dealership — where the salesman only cares about protecting his commission — banks typically have a team of experienced and high-priced attorneys who are working to protect an investment that is several times the value of an automobile. You can be sure they aren’t going to send a twinkly-eyed arbitrator your way who has your interests in mind.

If you’ve never negotiated a loan modification before, it can be a very intimidating process. The banks know this and will take full advantage of your lack of knowledge and experience. In a best case scenario, the bank may be willing to work with you. But be assured that they will do their best to corner you into accepting whatever terms they see fit to offer. Worst case, the bank will simply flat out refuse to talk with you.

So I Don’t Have Chance?

In most situations, the best way to fight a fire is with water. But sometimes, fire has to be fought with fire. The banks have an attorney (or even several) working for them. So should you.

An experienced loan modification attorney has several things going for him. To start with, he’s worked with lending institutions before and will have a pretty good idea of just how far the bank can be pushed. He understands their needs, and is therefore able to bring to the table an offer that gets you the best deal possible while still being acceptable to the bank.

Furthermore, an experienced attorney understands loan modification law. There are laws designed to protect you. But if you don’t know what they are or how they apply to your situation, then those laws may as well not exist.

But most importantly, your bank knows that your attorney knows what they don’t want you to know. That alone will command respect and bring added weight to the table that can be thrown around if needed.

The moral of the story? If you’re looking to loan modification as your savior, then ante up for a good attorney. His fee will pale in comparison to what you save — both emotionally and monetarily — down the road.