by Daniel Kodam, Esq.

As the housing crisis continues to loom and foreclosures remain an unfortunate reality, families may find themselves at a loss when it comes to keeping their homes.  A stumbling economy coupled with mounting mortgage payments can make it difficult for people to remain current and even keep their home in the long run.  For those who find themselves in this unfortunate situation, a loan modification is an option worth exploring.

A loan modification is a permanent change in the terms of one’s mortgage that allows the homeowner to become current and results in an affordable payment as well. The first key to securing a loan modification is communication.  Communicate with your lender, whether it be by your own personal contact, a loan modification company or through an attorney.  Most commonly, lenders are not willing to negotiate until the homeowner has defaulted on their payments, but if you feel you are headed in that direction, it is best to be proactive by notifying your lender of your situation.

First be aware that initial contact itself can take numerous attempts. Following this initial communication, the negotiating process will begin in which you may propose changes in the terms of your mortgage, such as the amount of interest rate or the period of repayment.   Additionally, your lender will want proof of income, employment and the like to show that you are able to make such proposed payments.  A loan modification package will then be submitted to the lender and the lender will then decide whether to accept the offer of the new terms.   After the terms are accepted, a new agreement will be made and the loan modification will go into effect. 

Overall the process can take anywhere from 30 days to six months. Throughout the process, it is important to document all conversations and proposals in order to reference different terms previously discussed so that negotiations are always moving forward.   While it can be a lengthy and overwhelming process, a representative company or attorney can be of great assistance in completing the transaction.  In either case, a loan modification is well worth the effort for those individuals who want to maintain the security and stability of their home as our country moves forward through this difficult time. 

Daniel Kodam is with Daniel Kodam and Associates at 41880 Kalmia Street, Suite 130, Murrieta, CA.  For more information on this article or other questions, please call (951)445-4905.