The state of the housing market is leading many people to refinance and modify their current mortgages. A mortgage modification, also called a loan workout, is an agreement between you and your lender to amend the terms of your loan. The ultimate goal of a loan modification is to help you achieve an affordable payment and avoid foreclosure. Loan modifications are used to create a win-win for the lender and homeowner, and usually result in lower interest rates, lower payments, modified loan terms, and even loan balance reductions.
If you are interested in modifying your loan, there are several things you must do. The first thing is to contact your lender, and if possible, have legal counsel involved in all communications with your lender, especially if you are behind on mortgage payments. It is also good as a homeowner to become knowledgeable of the many aspects of loss mitigation and how you can get mortgage help.
There are a host of resources available and offered singularly and via partnerships formed by the U.S. Department of Housing and Urban Development (HUD). One program is called Don’t Borrow Trouble. This is a program offered by Freddie Mac. It is an anti-predatory lending initiative dedicated to helping consumers identify the common signs of predatory lending and avoid taking out loans designed to fleece consumers. Before you take out a loan to finance your way out of your current situation, visit DontBorrowTrouble.com to learn how to protect yourself.
Another program that can assist homeowners is HOPE NOW. HOPE NOW is an alliance between counselors, mortgage companies, investors and other mortgage market participants. Their goal is to increase outreach efforts to homeowners in distress to help them stay in their homes. The members of this alliance include the Department of the Treasury and the U.S. Department of Housing and Urban Development. Their efforts are directed toward encouraging the lending industry to assist with modification programs by using community organizations such as the national Urban League and the National Council of Laraza and major mortgage lenders across the nation. The HOPE hotline (888-995-4673) is staffed by HUD-approved credit counselors who are always available to help borrowers with mortgage concerns.
The National Urban League is another great resource for people seeking assistance with a mortgage modification. The Urban League, whose programs are designed to promote asset building and wealth creation for people of color, can provide certified counselors to assist homeowners in determining their mortgage modification options.
–torrance stephens, ph.d.
