Pros and Cons of Doing Your Own Loan Modification

A loan modification is when your lender agrees to modify your current loan by adjusting your interest rate to a lower rate, and extending your loan terms.  The lender may also agree to forgive arrearages or reduce your principal.  The purpose of a loan modification is to make your monthly mortgage payments more affordable.  Most people don’t understand the modification process so they usually hire a loan modification company or modification attorney to negotiate their modification with their lender.  You can negotiate your own modification, but you should do some research and educate yourself on the process first. Also, you may want to consult with a modification attorney for advice before you attempt to obtain a modification on your own. 

Negotiating with Your Lender on Your Own 

There are some good reasons why you might want to negotiate a loan modification directly with your lender which include: 

• Avoiding loan modification scams and crooks taking advantage of your situation.
• The amount of paperwork is the same, and you don’t have to pay anyone to do it. You can save up to a few thousand dollars by doing your own modification.
• You have more incentive to negotiate the modification because you are fighting to keep your home.   

If you and your lender agree to participate in one of the government foreclosure prevention programs, your lender has to follow the government guidelines so you don’t have to worry about them charging extra fees for BPO’s, appraisals and other out of pocket expenses.  The govenment guidelines are fairly simple to understand.  As long as you complete all the forms, and submit the required paperwork, you should be able to handle the process yourself.  

On the other hand, since you only get one chance to obtain a modification, if you make a mistake, you could end up losing your home to foreclosure.   

Why You Should Hire a Modification Attorney   

You may want to hire a modification attorney to negotiate your modification for the following reasons: 

• An attorney understands the mortgage and foreclosure laws.
• The attorney has established relationships with lender loss mitigation departments.
• An attorney is experienced at negotiating modifications.
• Only an attorney can legally represent you.
• Using an attorney alleviates your stress. 
• The lender will take your modification request more serious when an attorney is involved. 

Hire an Attorney 

A loan modification attorney can prepare all the necessary paperwork for you to help speed up the modification process.  You don’t have to worry about having to speak to your lender because the attorney will handle all the negotiations.  Using an attorney increases your chances of getting approved for a modification.