A person’s home should not be a point of stress. Home is refuge, a place to escape the other stresses of the world. But when a mortgage is distressed, when a home loan foreclosure is a real possibility, that place one calls home is stressful on a very high level.

So, those are the headlines we see in the news every day. But buried in the news, perhaps because it doesn’t fit the trend of economic chaos and collapse, is that loan modification is possible, even if a borrower is several months behind in their mortgage payments. 

How so? Banks do poorly when they foreclose on properties. It’s not the way for them to make money. When they foreclose on a mortgage, it’s a business loss: the monthly stream of payments is cut off, they have a property to manage and insure, and they then have to resell it, likely at a loss (given current market conditions). They want you to present them with a new plan to keep it.

Loan modification firms are now able to help homeowners in distress. When an ARM or drop in income or illness or divorce or any other stressful events reduce a homeowner’s ability to keep up with monthly payments, there may be a way to still make smaller payments. The loan modification firm knows how low a bank will be willing to go – in fact, they can predict success in a loan modification negotiation in advance, based on clear, objective data. A loan modification firm will ideally charge about one month’s mortgage payment from the borrower to pursue the modification (perhaps on an installment plan). If they are surprised and fail to achieve a favorable outcome, the fee should be refunded (reputable firms offer this).

It’s about reducing stress in a significantly meaningful way. Because it’s about preserving one’s home, perhaps the most de-stressing place a person should have in their life.

While it may seem only the Wall Street fat cats get a break in this economic crisis, there is one corner of the loan foreclosure situation that actually enables homeowners to get a break as well.

It’s called a home loan modification. These are deals, negotiations with a lender on behalf of the homeowner who is facing possible loss of a home due to foreclosure. A lender will consider a recast of the mortgage to a manageable, affordable set of terms if the borrower can demonstrate some ability to pay, even if compromised from the past.

What’s required is documentation of income. This is looked at in relation to the monthly mortgage payments the individual is making. In many cases, those payments have ballooned due to a bad ARM (often, the borrower was unaware of the ARM terms and possibilities when the mortgage was first contracted).

But what most homeowners don’t understand is how low a bank is willing to go on the terms. Banks are in business to make money, but they also lose in a foreclosure situation because the process is costly. Not only do they have to engage their own lawyers and other staff in the proceedings, but they then are stuck managing a property and its sale. In the current housing crunch, the chances of them selling the property at a profit are slim. So, bottom line, banks don’t want to own the property. But only industry insiders know that point at which a lower-cost mortgage is and is not profitable to them. This is why thousands of homeowners are contracting with loan modification firms to do the negotiations for them. Home modifiers charge about a month’s mortgage payment in a fee (upfront, or in installments). If they are unsuccessful in achieving a loan modification, they then should (should, not all do, only the good ones) refund the fee in full.

It’s the only way to stop foreclosure for millions of homeowners. And, it works.

It’s a fact: loan officers at banks typically deal with 700 borrowers each. This means that they really don’t have a lot of time to deal with anyone facing possible home loan foreclosure or other financial distress due to a bad ARM, income loss, illness, divorce or other such situations.

Which is unfortunate, given the effects of the recession and housing market slump. Because if they had the time to look at each individual case, they may well be able to determine ways for the mortgage to be recast, to settle in at a favorable rate that will enable that homeowner to keep his or her house and continue making payments.

Why would they bother if they had the time? A home loan is recurring, monthly income to a bank. Plus, they like to have loan customers over the long haul because those customers ultimately might do other business with that bank. And when banks take possession of houses, they ultimately lose. The process takes up staff time, and then the maintenance and sale of the house generally drives them into a net loss. Banks don’t want your home.

Loan modification firms are stepping up to the plate on behalf of homeowners. They are independent lawyers and accountants, finance experts who know what terms a bank will still find worthwhile — lower monthly payments don’t necessarily mean a loss to them.

For any homeowner to engage the services of a loan modification firm, it is essential that they check the terms of THAT arrangement. The firm should charge a flat fee – one month’s mortgage, approximately, and no points or recurring fees. They should also provide a money-back guaranty. This is because they usually know with a high degree of confidence that they will succeed on a case before taking it on. Better firms are also offering an installment plan, allowing the homeowner to pay the fee in more than one payment.

With a home loan modification firm working on your behalf, you’ll rise to the top of the loan officer’s 700 cases and get action relatively quickly.

Alright already. Everyone’s had enough of the doom and gloom of the economy. If you’re a homeowner with a distressed mortgage, perhaps because of a crazy ARM that has increased your monthly payments to an intolerable level, you’re probably sick of hearing about how bad things are.

Here’s the good news that gets little attention in the press: your mortgage terms can be changed. And it doesn’t take super stellar credit, as is required with a loan refinance. Loan modifications are for people who’ve faced difficult circumstances, such as loss of income, divorce, illness and medical bills, or other adverse situations. A loan modification is when a bank looks at an individual situation and decides that it would be worth more to them to NOT foreclose but instead work out a manageable plan with the borrower.

The trouble is most people don’t know about loan modifications. And of those who do, the whole process of approaching and dealing with a bank may be intimidating. Bank officers are harried enough with all that’s going on their industry. Typically, a loan officer has 700 cases to manage, many of whom are emotionally distraught people (and understandably so). They would try to help if they had the time to educate you.

A better path, one taken by thousands already, is to engage a home loan modification specialist firm. These are qualified experts in mortgage law and finance. Typically, a lawyer and a finance person will examine your existing loan and the rest of your situation, then look at who your lender is. They have insider industry information on what a bank may want to do.

When your mortgage is successfully renegotiated, you pay the loan modification firm a fee of about one month’s mortgage payment. If they are not successful, you owe no payment at all (check: only the better firms provide a 100 percent money back guaranty). In the end, it’s a no-lose quest for the homeowner who is worried about keeping their home.

While your home may be a much bigger asset, the loan on it when in distress is more manageable than most car loans. With a car loan, if you are unable to pay on the terms the car is repossessed rather quickly.  But home loan foreclosure laws require a process that allows the homeowner to work out solutions.

And there are options for managing a home loan, to recast the mortgage terms to a more favorable outcome for the homeowner. If a homeowner can prove an ability to keep up payments, even if less than the original terms, a bank will be amenable to working it out. Why? Banks don’t want to repo your house.  A car can be easily sold again, but houses are far more complicated. Plus, the bank has to spend money in the foreclosure process, only to lose a long term customer in the process.  They want to keep you in your home. Really, they do.

Still, many homeowners are unfamiliar with how to achieve a loan modification. The terminology is unfamiliar, and they don’t know who exactly to talk to at the bank. This is why many thousands of people in danger of home loan foreclosure are turning to professional home loan modification specialists. These are lawyers and mortgage finance experts who know how banks work, and what financial arrangements remain attractive to a bank even if the monthly payments from the homeowner are reduced.

If working with a loan modification firm, check their offerings. Do they have a high success rate, over 90 percent? And if they fail to succeed in negotiating your mortgage to more favorable terms, will they refund your fee? As far as fees go, it should be a set, one-time fee, not points or a recurring expense, perhaps offered on an installment plan. With these factors, the homeowner is in a no-lose situation.

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).

People whose homes are in pre-foreclosure may feel they have already lost. The sense is it’s only a matter of time before they move somewhere to rent, a world they thought they left when they optimistically bought their house or condo in recent years.

Anyone thinking that way needs to stop dead in their tracks and say, “no!” In fact, without a government program, without winning the lottery, a homeowner in trouble can recast the loan terms that are problematic to a manageable level. The solution is found in loan modification firms – staffed by by bank-savvy lawyers, financing specialists and real estate professionals who know the vulnerabilities that banks are facing. Facts are, the banks lose in a foreclosure too. Loan modification firms have the lingo and know-how for getting the bank to reconsider ways to keep you, their customer.

Wouldn’t it be great to recast your loan? Whether you are in pre foreclosure or in danger of getting there soon, wouldn’t you rather find out about the possibility of refinancing? There is actually no risk — look for a reputable home loan modification firm that charges about $300 per loan (no points — that’s the full amount you should pay), and if they are unsuccessful, they should offer a money back guaranty.

The government stimulus plan – meant to generate or save as many as 3.5 million jobs – is separate from the Obama administration’s efforts to stop housing foreclosures on primary residences. But in fact, the two work toward a common goal of stopping the economic slide. And just as important, they both have a lot to do with keeping people in the homes they bought in good faith, expecting to own for years to come.

It comes together in home modification loans. Anyone with a job, but facing difficulty with keeping up mortgage payments and not eligible in the government program directed at stopping foreclosures, can recast the terms of their loan privately. This is because a private, third party of experts can be hired for a nominal fee by the homeowner to work out better mortgage terms with their bank. For example, if your mortgage was an ARM and the monthly payments have shot up beyond your ability to pay even with employment, the loan modification company can engage in loss mitigation negotiations with your bank to stop foreclosure from happening.

Why? Your bank does not want to own your house. Your bank would rather you own it, you take care of it, and when the time is right, you sell it at a profit that enables you to pay off your loan (and, ideally, pocket appreciated value). In time, you should be able to do that. That’s why loan modification firms made up of lawyers, bank specialists and financing professionals are a smart hire (cost: about $300 or slightly more per loan) for anyone who otherwise might lose many thousands in a foreclosure.

Loan modification firms are changing the game for banks in how they work with distressed homeowners. In thousands of cases across the country, it’s a story of David beating Goliath because the homeowners’ special weapon – experts in home lending – are doing the fight for them.

Here’s how it works: The homeowner under pressure from a bad mortgage (often an ARM that jumped monthly payments, or a home “under water” because the amount owed on the loan is greater than the home’s current value) may lack the knowledge to approach a bank on their own, and may be intimidated by the terminology of banks. So they hire a loan modification firm for their expertise and skills – at mortgage law, real estate and financing – to do the work for them.

Borrowers generally pay a fee of $300-$400 for this service. In successful cases, that can equal the savings in the first month.

Loan modifiers are successful due to a major, underreported fact facing banks. That is that banks lose in foreclosures. They lose a customer from whom they expected years of income. They get stuck with a property to manage. And they have to figure out how to sell it in a depressed housing market that may not turn around for months or years into the future. Modifiers are so familiar with various banks’ specific positions and circumstances that they should be able to provide a money-back guaranty to clients, creating a no-lose proposition for borrowers.