Loan Modification Terms – How to Negotiate Loan Modification Tenure with Your Lender?

Loan modification is one of the best options one looks for to avoid foreclosure. In general, people find it a tough nut to crack. However, it is not that difficult. The key is to have the correct and complete information before approaching the bank or mortgage company.

Here are some tips to help you effectively negotiate with the lender about the terms of the Loan Modification:

· First, be sure to contact the lender before they file a ‘Notice of Default’. You should apply to the lender as soon as you realize you won’t be able to make a payment or immediately when you’ve missed one. Don’t wait for them to contact you.

Next, draft a hardship letter with all your contact and financial details along with proof. Be very honest and frank when giving your details. Do not misinform anything or hide anything.

Send the letter by certified mail and make sure you have a receipt that you received the letter.

· Then contact the bank’s loan modification department through the bank’s or mortgage company’s website or make a phone call.

Keep records of all phone calls, their times, who you talked to, what you talked about, etc.

· Before speaking with the bank you must be clear about your plans for the future. For example, if you’re sure you want to settle in that home permanently, you should try to come to a long-term loan modification agreement, such as 20 to 30 years.

· Gather as much information as possible about the bank’s policies and make the best use of them. You should apply accordingly to get the maximum benefits from your research.

· You must know the amount you can pay as monthly mortgage payments. For that you should have the debt-income ratio.

You can seek professional help from professional advisers designated by the US Federal Department of Housing and Urban Development (HUD). They guide you on tips to manage your finances, approach banks and also act as your representative (if necessary ). These services are all free since the Federal Government pays them for these services.