The Lowdown on the Mortgage Loan Restructure Process


Most homeowners are aware of the current sub-prime mortgage crisis, the government's efforts to correct it, and the many loan modification companies that exist to help this effort. What you may not know, however, is that there are hidden dangers to dealing with the mortgage company yourself and why you may want to reconsider a do-it-yourself approach.

Remember that the mortgage servicer is not on the side of the homeowner. They are merely concerned with their own bottom line and have no incentive to patiently walk the average consumer through the process.

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What the Government and Media Want You to Believe

Should you believe the positive spin being put on efforts to help the current economic situation by the government, as well as the media? If you listen to the nightly news, you may find yourself fully convinced that you can deal with your mortgage servicer yourself and quickly and easily restructure your loan so that you are safe from threat of foreclosure.

What they are not telling the American consumer, however, is that as a legal document, there are legally binding terms in that mortgage document which affect the available options. Sound legal advice is necessary to negotiate with the financial institution and come up with a resolution that is beneficial to all parties concerned. Without professional help, the homeowner may quickly once again end up facing foreclosure.

Homework and Research Are the Keys

Any homeowner who is considering going through the process of restructuring their loan is well advised to first do their homework. Know your options, as well as the current state of affairs regarding your mortgage.

If your home loan is already delinquent, chances are that the mortgage servicer has already tacked on additional late and processing fees. These can be upwards of $10,000. Carefully examine the current amount due on your loan to determine if your financial institution has added these exorbitant fees without your knowledge.

You will also want to pull out all of your loan documents and go over them with a fine toothed comb. Read all of the fine print and pay particular attention to the terms set forth regarding delinquency. You must know what basis the bank has for offering their less-than-beneficial terms before starting the process of negotiation. Remember, too, that the original financial institution you dealt with in all likelihood no longer holds the loan.

Do It Yourselfers Face Risks

Some homeowners may still be considering contacting their mortgage service company directly at this point. There are some further risks to consider before attempting to do so without the benefit of using loan modification companies.

Think about the fact that the new mortgage will undoubtedly include terms that are dangerous to the homeowner. Such items as a release of liability clause may be added. What this means to the consumer is that they are unable to seek legal action against the mortgagor under any circumstances - obviously a detriment.

The fact is that most homeowners who restructure their mortgage without benefit of professional counsel will end up facing foreclosure again within six months of the new loan. Remember that the financial institution only cares about getting their money and will not do what is in your best interests.

The best recommendation is to utilize the services of loan modification companies. Their staff is well-trained in the art of negotiation and aware of all legal ramifications. A professional is always best at representing your interests and in today's economy, it simply does not make sense to settle for less than you deserve.

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