The Mortgage Modification Guide

What is a mortgage modification?

A mortgage modification is a way of helping Americans who are struggling to pay their mortgage to stay in their homes by changing the terms of their mortgage and reducing their monthly payments. Lenders are being to encouraged by the Government to renegotiate mortgages to avoid foreclosure on family homes.

“ My plan establishes clear guidelines for the entire mortgage industry that will encourage lenders to modify mortgages on primary residences. ” - President Barack Obama

Mortgage modifications are done, for the most part, for people who can no longer afford their monthly payments, although this is not the only way people qualify. According to the Federal Housing Administration the safe limit of spending is between 31-43 percent of a persons income. Conventional financing limits are typically 28-36 percent. If you're spending is around or higher than those figures, you qualify for a mortgage payment reduction through a mortgage modification.

Act now and find out if you might be eligible
for a mortgage payment modification.

There are other qualifications for mortgage modification, for more information on the topic, please read the following page: am I eligible for a mortgage modification?

What happens during a mortgage modification?

Typically what will happen is, once a mortgage modification agent has gathered all the information required for a modification, they will work with a mortgage specialist or an accountant who will decide what the current market value is for your house if they think that will help lower the monthly mortgage payment. They accountant will also take a look at your financial situation and get you down, not only to a safe level of spending, but to the lowest level possible. There are a number of factors that are taken into account, and once they have an idea of what you, the home owner, needs, the negotiation process can begin.

Mortgage negotiation process

During the negotiation process negotiators will use the information given to them to spell out the home owners situation to the lender and use that as leverage. During the process the negotiator may go into detail as to how the situation of the home owner will play out and then go over what the lender stands to lose. Thanks to their understanding of accounting, they know how much the lender makes and what the lender can afford to do. With this knowledge they work out a new mortgage that will be acceptable to both the lender and the home owner. Of course the new agreement will be much more in favor of the home owner than it would be if the lender were to redo the mortgage, because all they want is to keep the home owner from going bankrupt so they can keep paying.

Continued: Am I eligible for a mortgage modification?

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