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.

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.

In the midst of endless bad news on the economy and the housing crisis, a fact stands out for every homeowner who worries about foreclosure:

Banks don’t want to own your home. They lose money when they do. Managing property and selling real estate are not the businesses they want to be in.

Yet all one sees in the news is how millions of people are in danger of foreclosure. What is not being reported is that an intermediary, legally and financially trained professionals, can help you recast your mortgage through loan modifications. Federal loan modifications are being undertaken by thousands of people who have undergone one or several of the following hardships:

• Adjustable ARM loans that have risen beyond affordability.
• Job loss or work reduction, income interruption enough to make a mortgage refinance the only possibility.

Even if a homeowner’s credit rating has slipped and they are already behind in their mortgage payments, workout plans with the bank can be negotiated. The trained professionals can and should review your case before asking for fees, and those fees should be reasonable: about $300, enough to cover their costs, without add-ons or other surprises.

Just as important as being able to stop foreclosure, a loan modification consultant helps relieve the emotional stress that almost seems to be required for foreclosure prevention. (Note: It doesn’t. This is a business transaction, best managed with a calm approach.) They are professionals, working on your behalf with knowledge on what banks need too.