The problem that many people are facing in the current economic crisis is that the value of their home is less than the outstanding value of their mortgage. This may not be a result of anything that the borrower did wrong - it may just be the result of market conditions outside the control of the borrower.

The market reacts in a manner relative to other properties, much like dominoes falling down. It is a chain reaction. When the property values drop in a neighborhood the decline in values tends affect other properties. With market conditions of the economy on a decline and people losing jobs, this resulted in the spending power of individuals to drop. this then causes more job loss and a weakened overall economy.

The magnitude of this economic downturn has reached into nearly every aspect of the lives of the citizens of our nation. The impact has been far reacing and has resulted in the number of homeowners at every level of the socio-economic strata finding themselves with upside down loans and looking for options to solve their problem, they need foreclosure solutions.

If you are in this situation you have some options depending on your long-term plans. If you are upside down and plan to continue to live in your home and can afford your current monthly expenditures including your mortgage payment then you can just sit tight and wait out the storm. Congratulations, you are in much better shape than many of your neighbors.

If you are upside down and you can not continue to make the monthly payment, keep food on your table and gas in your care you might want to pursue a loan modification. Many people have lost their jobs or had a reduction in their pay either through less hours or being asked to work for less money. Loan modification gives you the opportunity to change the terms of your loan by changing some of the components that determine your monthly payment. This can include a lower interest rate, longer amortization period, or even a reduction in the principal value of your mortgage. Historically, lenders have not been willing to work with borrowers to perform loan modifications and would just proceed with foreclosure, take ownership of the property and then sell it to someone else. However, the sheer volume of troubled properties has pressed the issue that there is a huge problem and it needs to be addressed in a manner that will not cause further decline to the financial markets. It is important to avoid or stop foreclosure. Acting early is important.

Does it feel like you just woke up one morning, looked around, and asked yourself “how did we get into a situation where we would need a housing rescue bill? The problem is long and multi-faceted. As with most problems in the financial realm it begins with the quality of the underwriting of the loans. When underwriting standards are relaxed it often results in too much credit being extended and that allows buyers to purchase beyond their means. The inexpensive (at least initially) and easily available credit heightened the demand for homes. As the demand increased, prices for homes increased, and the spiral continued with upward trends in housing prices. As investors jumped into the market to take advantage of the rising prices they were looking for payment options that would compliment their “flip” mentality - they were not particularly interested in the long term affects of mortgage financing structures. The demand for the lowest possible monthly payment was the result of short term thinking that was an early contributing factor to the need for the American housing rescue.

The low monthly payment provided by ARM,s negative amortizations and other structures allowed borrowers to purchase homes that they would otherwise be able to afford. A slowdown in the real estate market made it impossible for many to sell their homes and as a result many are in pre foreclosure.

This foreclosure problem has existed for many years however, the current situation is unique due to the number of borrowers that are relying on mortgage loan modifications. The number of properties in this situation has catastrophic implications on the financial markets. Many people caught in this situation are not quick flip investors or homeowners stretching beyond their means. Many are just ordinary people that were looking for a better opportunity for their family and now they face foreclosure and need to stop foreclosure.

The solution to the problem is not to let the loans all go bad - the financial institutions could not survive the blow. Many borrowers are relying on mortgage loan modifications and government help to avoid foreclosure. So, where do we go from here?

Most would agree that keeping people in their homes is better for the economy than homes foreclosed by banks that are vacant. This would result in even further decline in housing values and have a profound impact on the economy. The Obama stimulus package has earmarked funds dedicated to this segment of the economy. More to come on ways to save your home from foreclosure. continued…

For the homeowner who has suffered the financial challenge of skyrocketing interest in an ARM, or a heartless system that fails to protect them from job loss or costly illness, it may seem that no one is looking out for them.

But difficult times do create heros. Loan modification firms have figured out that a tremendous amount of waste and loss happens in foreclosures – for all parties involved. To stop foreclosure means they negotiate with banks on the borrower’s behalf, finding the middle ground where the bank can keep a customer and not own a house, while the borrower keeps his or her house and even gets lower monthly payment terms.

This win-win is possible because loan modification firms are staffed by lawyers and financial professionals who have the knowledge to negotiate. They earn a flat fee on loan modifications – generally, about a month’s mortgage payment – and they have a great deal of confidence on when a case will succeed before they go to work, simply because they are familiar with what factors will mean something to the bank.

Most reputable loan modification firms offer a 100% money back guaranty if they do not succeed (a rare occasion). This is testimony to how well they understand where banks stand relative to the housing market meltdown.

A professional approach often means hiring professionals to do the work for you.

At a time when a homeowner is in pre-foreclosure or just worried that foreclosure will hit them in a few months, it may seem impossible to hire someone to help you out of this situation. But loan modification firms are structured to help people in the greatest need, those who are struggling to stop foreclosure on their homes.

These individuals need a rescue. But for foreclosure prevention to take place, the homeowner needs to have some income and still be able to prove their current mortgage terms are untenable. Loan modification firms can examine the individuals’ cases and figure out how to present it to the lender in a convincing way.

There’s no deception in this process. It’s purely a matter of knowing what circumstances trigger a bank’s interest. Most banks lose in foreclosures, so they are open to hearing the case. It just helps with the negotiator knows their language, has all the right documentation ready, and communicates without the emotions that homeowners tend to have around the wrenching dilemma of foreclosure.

Millions of distressed homeowners fear that a letter from their bank stating they are in pre-foreclosure is the beginning of the end. They sometimes begin to make arrangements to move 60 days before the foreclosure is to take place.

Instead, that letter should be a signal to the homeowner to search for options. Of course, the homeowners knew they had difficulties for months and even years preceding this point. Illness, loss of income, divorce and other circumstances generally create an accumulation of debt that builds gradually. But if the homeowner can show that they have a stream of income of some sort, they should be able to work things out with the bank. Their option includes approaching the bank to see if they can recast the mortgage terms.

Of course, few people are capable of negotiating with banks on their own. This is why many turn to loan modification professionals – lawyers and financial people – to do those negotiations for them. As experienced experts who have knowledge on what a foreclosure costs a bank, the loan modification team can recast the terms of the mortgage that enable the homeowner to retain ownership, stay living in the house and with reduced monthly payments through a lower, locked-in interest rate.

Loan modifications work on a pre-approval basis: they examine a case before taking it on, and if unsuccessful, they return the fees to the homeowner in a money-back guaranty.

The scenario is typical in this economy and the housing meltdown: A homeowner experienced hardship and a mortgage rate increase that together put her behind in her payments by more than $10,000. Included in that are property taxes with stiff penalties for late payments. The homeowner has monthly income, but not enough to cover her regular payments, much less this back-due amount in arrears.

To stop foreclosure, the homeowner tries to contact her bank to find out options for working it out. Unfortunately, after several attempts at reaching a live person, the person she gets can’t tell her more than what she already knew, that her situation was a problem.

This homeowner is wise to engage a mortgage loan modification company to work the situation to her best advantage. For about the cost of one month’s mortgage, the loan modifiers will examine her case for foreclosure prevention opportunities. A reputable firm will not take a case unless it shows a high probability of succeeding, and if it fails in the end, they should pay the fee back with a money-back guaranty.

A loan modification outcome is always favorable to the borrower (but beneficial to the bank, which does not profit in managing and reselling properties at a loss). The borrower not only retains ownership of the house, but usually gets manageable monthly payments at a reduced interest rate locked in.

Arrears – back payments that many seem insurmountable to a borrower – can be rolled into the mortgage principle as a means for a homeowner to play “catch up” on his or her loan.

This is one of the potential outcomes of a loan modification plan. Most homeowners don’t realize that a bank is willing to shuffle the decks, so to speak, in stop foreclosure from happening to a homeowner.

Why? Banks hate to foreclose on property. It takes time and money to do so, and even the loan officers, hardened by the realities of the current economy and housing and lending meltdown, find it psychically draining.

An example would be couple A, suffering a reduction in income simultaneously to their ARM increasing monthly payments by $900 at a 9.75% interest rate. They struggle at first to manage it, but when other unanticipated expenses come along they fall first one month, then two or more months behind in their mortgage payment. Their property taxes are paid in escrow through the mortgage, so that then gets behind also. After about 18 months, they are facing foreclosure with $13,800 owed to the bank and their county assessor.

A loan modification team of lawyers, financial and real estate experts negotiating with the bank on behalf of the homeowner, is able to prove the couple could keep up payments if the interest rate were lower and the $13,800 debt is folded into the principle due. The bank agrees, and everyone emerges from the situation in better condition. Anyone looking for foreclosure prevention should consider this path, most probably through engaging a loan modification firm.

To listen to the general press, one would assume that a homeowner’s interest rate on their mortgage is written in stone.

News flash to the media and distressed mortgage holders: YOU CAN HAVE YOUR INTEREST RATE CHANGED. Not under all circumstances, but in fact persons facing hardship, even those in pre-foreclosure, are eligible for a recast of their mortgage terms.

Of course, many people are in difficult situations with ARMs (adjustable rate mortgages) because they didn’t take the time to read the loan documents, or they didn’t question a mortgage broker or banker when they bought their home or refinanced it in the first place. This is the root of the problem — inability to understand the language of banks and real estate.

Enter the loan modification specialists. These are teams of lawyers and financial experts who work for the holder of a distressed loan. They look at the facts of a case – the borrower’s ability to continue making some payments, albeit reduced, and the facts of the property itself. If they determine the loan terms are likely eligible for adjustment downward (to the homeowner’s benefit), they will go to the lender and make that case. Their advantage is knowing the language and the situation of the lender — in most cases, the bank loses in a foreclosure.

Anyone working with a loan modification specialist should be astute in managing the fee structure: Expect to pay about a month’s payment to the modification consultants, although they should accept that payment in installments, and provide a 100% money back guaranty if not successful.

All in all, it’s a no-lose proposition for anyone facing possible foreclosure or even extremely difficult mortgage terms.

Change is not a word most distressed homeowners want to think about. For anyone with an ARM that has taken monthly house payments higher than they can afford, change is bad. Change in employment status, or household earnings that have fallen overall, is not good either.

But if a homeowner can recast their mortgage – bringing the monthly payment to an affordable level – change is a very, very good thing. But is it possible, given the amount of press on the millions of Americans in danger of foreclosure due to adverse circumstantial changes?

Absolutely, change to more affordable mortgage terms is possible. But most people don’t have the savvy to negotiate with their banks. Instead, the smartest thing they can do is to work with a loan modification firm, a team of lawyers, accountants and other home lending experts who works on behalf of the homeowner. The mortgage modification specialists understand bank language, document needs and just how to show a bank that foreclosure is not in the bank’s best interests, either.

Change comes at a price, but it’s exceptionally reasonable and easy to justify. Loan modification companies charge about a month’s mortgage payment. But they can do it with a high degree of certainty – more than 93 percent of loan mod attempts succeed. And for the few that fail, the modification firm should refund the fee (ask about a guaranty upfront).

Foreclosure is the dirty word of 2009. With millions of Americans facing hardship from loss of employment, or an ARM that took monthly payments beyond reach of their income, or both, foreclosure and pre-foreclosure are common concerns on virtually every residential street in America.

What’s become plainly evident in this era is that the legal and financial language of mortgages and home ownership overall is beyond the comprehension of a majority of hard-working people. This includes those with college educations, even graduate level degrees. And it’s the reason why bringing in a third party to negotiate with a lender makes a boatload of sense.

Loan modification firms are specialists in real estate and finance law. They know how banks work, and what will convince a lender to change the terms of the loan. They are able to show the lender that a foreclosure is not in the bank’s best interest in many situations. When they do, they succeed in recasting the terms of the mortgage, effectively enabling homeowners to stay in their homes at lower monthly and life-of-the-loan costs.

Reputable loan modification specialists generally charge the equivalent of one monthly mortgage payment to work on a homeowner’s behalf. Because they can look at the objective details of a case before going to work, they should be able to project with high certainty whether or not they will be successful. And the most respected firms offer a 100% guaranty cash-back if they are not successful.