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.

Is it possible to stop a foreclosure if you’re not able to make monthly payments?

Possibly yes. An underreported aspect of the nation’s housing crisis is that banks really don’t want to foreclose. It’s a failure on their part, to have to take possession of a property, manage it and try to resell it. Especially in this market. They have to engage lawyers and real estate specialists in the process, and they lose a customer.

But with loan officers themselves handling 800 cases each, on average, it’s no wonder that homeowners in default don’t hear about the recast options. Cutting through voice mail purgatory takes weeks, and if the borrower lacks full information and documentation, the loan officer might not be very patient with the erstwhile distraught person facing loss of their home.

Fortunately, specialists in the area of loss mitigation – people who understand the laws of lending and real estate contracts – are now negotiating on behalf of homeowners. They are successfully finding ways to get banks to reconsider loan terms, achieving better mortgages and lower monthly payments for thousands of people.

The media likes to focus on the negatives in this economic downturn. But the business of loan modifications has so far gone underreported.

Borrowers are advised to withhold payments of fees – which range from $300 to about twice that, depending on location and circumstances – until the modification specialist can predict an outcome with a money-back guaranty. The process is that straightforward, such that they can predict with fairly good accuracy if a loan can be modified and a foreclosure halted.

The president’s homeowner bailout comes at a critical time for the nation’s homeowners and economy overall. More than $275 billion will help a lot of people hold onto their homes, and the economy overall will benefit.

But not everyone is eligible for these loans. A number of criteria need to be met – in part because your loan has to be in the Freddie Mac or Fannie Mae portfolio, beyond the control of virtually anyone who’s received a mortgage in the past twenty years – which leaves many borrowers in the dark.

But there are other options for other homeowners. The key fact is banks do not, not, want to foreclose on any properties. It costs them money. They get stuck with a house to maintain and sell — in a tough market. They lose a customer they hoped to have for 15, 20 or 30 years.

Loan modification is the route for anyone suffering an adjustable ARM or other loan terms that are unaffordable. And because navigating the details with harried loan officers is daunting to most people, loan modification specialists are rising up to help. They are legal, financing and real estate specialists who deal with the banks on behalf of homeowners, for a fee (around $300-500), to achieve better loan terms. Already, thousands of families have found ways to stay in their homes with a recast loan through loan modification consultants.

Key point to consider: make sure your loan modification firm does not charge a fee without predicting a high degree of certainty that they can get you better terms. Reputable firms know the conditions that must be met by most banks. A preliminary review of your case will tell them what their chances for success will be. It is possible to stop foreclosure, even if it’s already in process through this approach.

In this economic crisis, everyone wants to find a recast button. “If only we had made better decisions back when…” is said or thought in corporate boardrooms and at kitchen tables alike.

In fact, homeowners in mortgage distress are discovering they can achieve a home loan modification, actually negotiating better terms on their mortgage – good enough they can save their homes. The facts are that banks don’t want to foreclose. They are not in the business of owning, maintaining and selling homes – and are unlikely to unload these unwanted properties at their preferred prices in an historically low market.

But a large percentage of homeowners are uncomfortable with the loan modification process. They may not know they exist, or what can reasonably happen. The terminology is likely unfamiliar, and they fear they will make mistakes similar to the loan terms they agreed to at purchase of their property that got them in trouble in the first place.

This is why loan modification consultants are on the rise. Thousands of people have retained ownership of their homes, or exited with better terms, because they were able to use “loan mod” specialists. Legitimate loan modification firms can work around borrowers’ bad credit, assessing hardship and presenting a business case to the bank that helps all parties with loss mitigation. Their services stop foreclosure even in process, in some instances. Quality consultants will also limit fees to around $300 or slightly more, depending on the location, and not take a case until they’ve examined the details enough to proceed with high confidence.

Banks can be reasonable, if approached professionally, dispassionately and with an understanding of what they’re up against on their side of the equation.

Mortgage financing might not seem a likely option if you have lost your job, have bad credit, or a home that’s “underwater” – worth less than what you owe on your adjustable ARM mortgage.

But in fact none of these circumstances mean you can’t recast the terms of your mortgage. Because of federal loan modifications initiatives, mortgage refinancing is now possible. Why?

• Banks don’t want to own houses. They’d rather keep you as a mortgage-paying customer over many years.
• The economy overall suffers when people lose their homes. Society is more stable when people own, and still have money leftover to buy other goods.

This is why loan modifications are the new and effective solution for many people. It’s possible to negotiate terms on your own, but many housing advocates are encouraging homeowners to engage a third party, an independent loan modification company that is expert in negotiating with banks. They know where banks are coming from, the terminology and the paperwork process. They charge you a one time fee – look for around $300, a reasonable amount that enables them to make some money without soaking you in your sometimes-desperate situation – and will only take your case after examining your situation and circumstances.

So yes, there is a way to get mortgage refinancing, to stop foreclosure, to work with hard money lenders in ways that enable you to hold onto your home – despite problems with income and credit.

A few minutes spent investigating your options today might mean years of emotional satisfaction in the home you already own.

It’s hard to not be emotional about your home. You probably were excited when you bought it, and envisioned years of a happy life the first day you moved in.

That’s why the cold business of adjustable ARM mortgages, dropping home values, and even the need to stop foreclosure are so out of whack from where your emotions are. Try dealing with a bank when you are behind in your mortgage, or trying to get them to recast your loan in better terms. You’ll likely deal with someone who is not interested in your emotions.

Federal loan modifications are now possible to help you hold onto the home you love. Still, it is hard to separate the emotional from the business side when your lender is using terminology you may not be familiar with. And when you’re not familiar with terms, you worry you may make a mistake that could ultimate lead to home foreclosure.

A loan modification firm is set up to negotiate between the emotional factors and the hard money lenders. They understand your circumstances – because everyone they deal with is underwater, in need of mortgage refinancing in some way – but with the solid knowledge of what lenders can and want to do.

Most important, a loan modification firm is your advocate.

But proceed with caution. You need to make sure you select a home modification firm that plays fair and transparent: reasonable fees (about $300), no money down until they have reviewed your case for viability, and a 100% money back guarantee if they are unable to find workout plans.

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.