There’s hardly a segment of the U.S. population that hasn’t been touched by the financial and mortgage crisis over the past few months.
I know I’ve been hit by it, and several members of my extended family have as well. The stats say it’s close to 50% of homeowners who are facing some kind of financial difficulty right now, so if you are today, believe me, you’re not alone.
But let’s not harp on the negative, because there’s actually a really POSITIVE benefit that can come out of all this (amazingly enough, I know). And no, I’m not talking about the fact that the big Wall Street CEOs are still walking away with millions in bonuses. (Now THAT’S truly amazing, isn’t it?)
No. The really positive thing I’m talking about is the fact that the banks are in as bad a shape as they’ve ever been — probably rivaling how bad things were during the Great Depression.
But you know what? That’s actually amazing news for us for once!
Here’s why…
When Banks Are Desperate, the Little Guy Can Take Advantage
Okay, now this may take some getting used to, but it’s true nonetheless. Thanks to the fact that the banks are basically falling all over themselves to avoid mortgage foreclosures, they’re willing to go to some extraordinary lengths to work with homeowners like you and me who may be on the brink.
What they’re becoming more and more receptive to is something called loan modification — which is basically just what it sounds like. Reworking your loan to reduce the payment through an interest rate reduction, a reduction in the principal you owe, or both.
You see, banks are so desperate to keep most people in the “good loan pile,” that they’d rather reduce their profit by having you pay less every month, and keep you in your home and at least paying something, than to have to take the house back.
There are a lot of reasons why — including the fact that foreclosures are expensive, they don’t ever get the full value of the property when it does sell, they have to put a ton of money in escrow, and on and on.
But who cares about that. What we should care about is that there’s never been a better time to get the bank to sit up and listen to US for once.
Here’s How Loan Modification Works
A lot of people ask me if they can do a loan modification on their own, without hiring a lawyer to do it for them. The answer, of course, is yes.
But I wouldn’t recommend it. Banks are desperate right now, but they’re not stupid and they’re not in the charity business. They’re still going to say “No” more often than they say “Yes,” and when that happens, you need someone in your corner who knows your rights — and, more importantly, who the bank is just a wee bit afraid of.
So, what makes a good loan modification company?
They guarantee their work. I can’t stress this enough. They must guarantee that they’ll get you a modification or offer your money back. Without that, you’re basically putting the keys to your home in the hands of someone who may or may not know what they’re doing.
The first place I always tell people to visit when considering this is this mortgage loan modification site. You can fill out a short form there (should take around 15 seconds) and get access to someone who knows this stuff inside and out. Your home is too important to leave to amateurs.
I also recommend this site on loan modification for more details and advice on the process.