This economy is definitely in a rough patch. But it doesn’t have to be the end of the road for homeowners currently facing unmanageable home loan mortgages due to loss of income, divorce, illness, ARMs out of sight or other difficulties. There is a way to get better terms on a mortgage if the borrower is savvy enough to deal with their lender.

The path thousands are pursuing is through loan modification firms. These are experts in law, financing and specifically mortgages, specialists who take on cases they know they can win.  Underpinning this is the fact that banks don’t want to own houses. They are most interested in keeping mortgage payments coming in. When they foreclose on a property, they lose because they then must maintain it, suffer its liabilities, and then sell it – likely, at a loss in this historically down market.

A homeowner could negotiate this themselves, but few non-specialists have the inside industry knowledge to pick the terms that will be satisfying to the bank. It’s about knowing that point between the costs of foreclosure and the possibility of keeping a profitable client. Loan modification specialists have the necessary information and calculations for doing this. They charge about a month’s mortgage payment and provide a 100% money back guaranty, so it’s basically a no-lose proposition for the homeowner  – a rough, rocky road made smooth for the duration of the trip for anyone who wants to keep owning their home.

It’s pretty frustrating to see billions of dollars going to fat cats on Wall Street despite all their blunders and the effects their mistakes have had on the worldwide economy. Even more so for people who are facing true hardship, perhaps from an ARM or other difficult mortgage terms, even to the point of home loan foreclosure.

But homeowners can take charge of the situation. It’s possible to renegotiate terms of a mortgage with a lender for one simple reason. In a foreclosure, the bank loses too. They can resell a property, to be sure, but likely at a loss in this housing market. They also have to engage lawyers and other expensive staff in the foreclosure proceedings, a costly exercise as well. 

Of course, dealing with the busy loan officer on this during an emotional time is no easy task. This is why thousands of homeowners have engaged a loan modification firm, a team of specialists with industry insider information on what the lender is likely to agree to. They are skilled at finding the right price point, the monthly mortgage payment where the bank will still make a little money and the homeowner can afford the payments.

A qualified mortgage loan modification company will charge about one month’s payment on their loan as a fee – for example, if you’re currently paying $1000, that would be your fee. If it lowers your monthly payment by $200, you will be ahead overall in five months. Some mortgage loan modification companies are accepting deferred payments to allow the homeowner the ability to suffer no real upfront investment.

Many homeowners in or near foreclosure proceedings are unaware that the terms of their mortgage can be changed, even at a late stage. A bank/mortgage company will do this if they see a lender is able to make payments if the monthly payments are lowered.

Why would a bank do this? This is simple: a bank does not do well owning a house, particularly in this housing market. They are stuck with property maintenance, liability and the process of selling it again. This is not what banks do, and often they lose money in such situations. 

The question is where does a lower monthly payment and other mortgage terms, for example going with a fixed rate in place of an ARM, still beat the lower revenue the bank will get from a recast mortgage? An average homeowner is not usually able to figure this number out on their own. But when a professional mortgage loan modification firm is engaged, they are able to use their experience and industry information to come up with a number that is beneficial to all parties. It’s truly a win-win solution.

The better loan modification firms charge approximately one month’s mortgage payment on a property as their fee for service. And those experienced firms will know with a high degree of certainty – 90 percent, usually – in advance whether they will succeed at renegotiating the mortgage terms to a successful outcome. If not, the homeowner should be provided a 100 percent money back guaranty, thus making it a no-lose proposition for that individual.

A common misperception in the mortgage bailout discussion in the US is how the government is the only route for solving the problem. Truly, for millions of homeowners the Obama administration’s initiatives in this area will be effective at helping homeowners recast their mortgage in terms they can afford.

But for the homeowner who fears the help cannot come soon enough, perhaps because she or he is in a foreclosure proceeding already, a private route may be just as effective. Thousands of homeowners have already recast the terms of their mortgages through the help of a loan modification company. These are firms made up of attorneys and mortgage specialists who understand when and why a bank would agree to adjusted monthly payments favorable to the homeowner.

At its core, this is because mortgage lenders do not want to own houses and condominiums. That is not their core business, and they lose money on it most often. So if the borrower can find terms that allow the bank to make some money, even if less than before, they are more inclined to changing the terms of the mortgage.

The borrower might be able to negotiate this on their own. But with less knowledge and familiarity with banking terms, often the homeowner fails or is less successful. The loan modification firm typically charges a month’s mortgage payment – with a 100 percent money back guaranty – to find the best possible terms for the borrower. Better firms can project with more than 90 percent certainty whether or not they will be successful, even before they approach a bank. The process is that cut-and-dried.

Just like on “Who Wants to be a Millionaire?”, life sometimes has its lifelines. If you’re in a home loan foreclosure situation – already in process, or close to it – a home loan modification consultant is your lifeline.

Here’s how it works. If you are unable to keep up with your mortgage payments – due to the economy, illness, divorce or other reasons – your lender might be open to reducing your monthly payments by reducing your interest payments, the length of the loan, or by other means. A recast mortgage can mean the difference between keeping and losing your home.

There are several reasons you would hire an intermediary. One is that getting through to the right people at your bank may be a frustrating experience. This makes a little more sense when you realize that the average loan officer has a caseload of 700 homeowner mortgages. They are stressed too. Also, the loan modification specialist has industry knowledge of what a foreclosure would cost a bank.  Keep in mind banks don’t want to own homes — they are far better off with monthly payments and not managing real property, selling at a below-value amount and liability issues. So the loan modifier is essentially finding that point between where the bank loses money and where you can afford to be. Also, a loan modification firm is made up of home mortgage experts and lawyers who can deal without the emotion typically attached to a foreclosure situation. Minus the emotional factor, a rational solution is more likely.

Maybe your home is or is not worth a million dollars. If you can hold on to it, with a monthly payment that you can manage, you will probably get greater value from it in the future.