The oversupply of housing is affecting distressed homeowners in a multitude of ways. For many who can’t keep up with their mortgage payments, they are in an “underwater” situation – the sale price of the home would be less than the amount owed. To walk away from their home, they still would owe the bank money. Further, the neighborhood overall sees a drop in their prices with each foreclosure, and the problem multiplies with other people living nearby.

It benefits everyone if a foreclosure can be stopped. Especially the banks, the lenders. They stand to lose about $50,000 per foreclosure in legal fees and the business of owning and reselling the property.

This is why banks are willing to cut better deals with homeowners who otherwise face a loan foreclosure. The bank is willing to settle for less money that is still better than that $50,000 loss they would experience. But most homeowners do not understand how to go about a loan modification – it gets little attention in the media, so most people don’t even know about them.

Enter the loan modification professionals. These are lawyers and home finance people who know the industry very well. They can efficiently examine a case, look at it in comparison to the bank’s position, then negotiate the solution to the homeowner’s favor. Reputable loan modification companies will charge a fee of around a month’s mortgage payment, and provide a money back guaranty if they are not successful.

It’s a solution to the housing crisis for millions of homeowner, their neighbors and their banks.

No homeowner currently “underwater” with a loan that may be larger than their home’s value, or, who simply has trouble keeping up mortgage payments, should consider what they did a “mistake.”  There has been a flurry of media attention on financial TV programs about the economic crises being the fault of underqualified borrowers. That is flat-out wrong: the message for generations has been that everyone should try to own their property. The banks were more than happy to provide everyone with a loan.

The problem is the turn taken in our economy since 2007. Jobs have been lost, people have gotten sick with inadequate healthcare, and other problems arose. The banks were mismanaged in so many deep, demonstrable ways. To put the blame on anyone with an exploding ARM or simply a mortgage that is no longer affordable is invalid and unproductive.

The individual homeowner facing possible foreclosure has an underreported option. It is to get a loan modification. This essentially is a way to clean up the mess of a mortgage with bad terms, such as a high interest rate. A loan modification company will act as an intermediary or third party, approaching your lender on your behalf. This is key, because a loan modification firm has far more knowledge of how the industry works and what terms are morel likely for the bank to accept.  

Anyone considering the hire of a loan modification firm should check their success rate (more than 90%?), and their money-back guaranty of your fee if they are not successful. If it checks out, go with that firm. For the cost of about one month’s mortgage payment, you may get tens of thousands of dollars in savings over the life of the loan.