Craig Baranowski's Q&A

Loan modifications can be done yourself. There is significant amount of information available on the internet. In addition, there are many free counseling services that are most likely affiliated with your bank such as the Hope Now Alliance.Call your bank, find out what they require for a loan modification. Do your homework and then decide if it is something you can do on your own or need professional help.

You have a few options and I recommend researching each one to see what is right for your particular situation. If you want to keep your home a loan modification may be a good option.You can speak with a HUD approved counselor at no cost in addition to counselors affiliated with the Hope Now Alliance. Many banks are affiliated with the Hope Now Alliance and offer free counseling services to review your options.

You have options. Speak with your lender. They should be more than happy to adjust you to a rate that respresents the current market. Banks are not in the business to aquire non-performing debt and will work with someone that it current with their mortgage but is insolvent. If a reduction in interest rate will bring you back to solvency and keep you in your home., this is a win-win for everyone. There is a good probability that your lender will work with you If you can prove that a reduced interest rate will bring you back to solvency and you can demonstrate stable income and furnish a good hardship letter.Good luck and stay positive!

This is an excellent question and one that causes many people to wonder where they should be financially after a loan modification. How do you calculate what your lender will agree to for a loan modification before you speak with them? What loan payment amount should you target when approaching your lender for a loan modification?This is really a question of solvency and insolvency. When you can no longer meet your financial obligations with your lender as debts become due, you are insolvent. The goal is to become solvent. Read the full post here

You are not alone. There are currently over 6,000 foreclosure starts a day. Over 540,000 foreclosure starts in Q3 2008.Before I answer your question, I want to state that you should always seek legal counsel and speak with your accountant before making any decisions regarding your mortgage payments or financial situation. Yes you can modify your mortgage without missing any payments. In some cases lenders will work with you and modify your mortgage before you are in default.However, the bad news is that many lenders are completely overwhelmed with the large number of homeowners in distress. I explain it to my customs with a triage analogy. Think of a hospital during a massive natural disaster. The hospital is over capacity and cannot handle the volume of patients needing help. The hospital implements a triage program and prioritizes patients by the severity of their illness or injury. As a general rule, the closer you are to foreclosure, the faster you will receive a response from your lender. It is best to speak with your lender before there is a problem.Be proactive, contact your lender. Work with them on a loan workout package. You can make it happen.

It sounds as if your lenders idea of a repayment plan is not a win-win situation for both parties. You still have options. Did your lender have you submit a financial package with a hardship letter? You needed to demonstrate to them with documentation that you can pay $2,500 a month, any more and you will become insolvent. I recommend speaking to a HUD approved counselor to have them look at your financial situation and get a clearer picture of a reasonable workout plan that can be a win-win for both parties.In many cases your lender will want to see you cut some of your monthly expenses that they consider as luxury items. For example, if your monthly expenses are $2,500 per month plus the $2,544 mortgage, you may need to reduce the $2,500 down to $2,000 to show you are willing to work with them. This would include cutting premium cable service, possibly eliminating a car payment…ect, ect.Go to the HOPE NOW Alliance website at the link below for a list for a free counselor in your area. You can also see if your lender is participating in the HOPE NOW Alliance. Your lenders will work with you, but it is your job to show them how.

Chapter 7 makes a loan modification more difficult but not impossible. It is best to consult your bankruptcy attorney on your specific situation. As a general rule, as long as you can demonstrate that you can pay your mortgage long term under the new modified loan program, your lender should be open to working with you. It is best to do your homework on loan modifications, contact your attorney and then contact your lender. It is critical that you clearly document what you can and cannot afford as well as how you got into your current financial situation.

Roberto,Loan Modifications can be done on second homes and investment properties. The H4H program is a very specific program with lots of limitations and obviously may not fit your current situation. Many lenders are willing to work with you on a loan modification. Remember lenders do not want your property.You also have the option of doing a short sale on your second property and a loan modification on your primary home. However, both will require you demonstrating financial hardship and insolvency. If you can demonstrate that you can become solvent after short selling your apartment and modifying your primary home loan, then the loan modification will have merit with your lender. 

A deed in Lieu is more damaging to your credit. But the question I would ask you is what is your situation and what are you trying to do with your property?A short sale is a great option if you need to sell your property because your are insolvent both long term and short term, and you have negative equity on the property.If you would like to stay in your home and your financial hardship is short term, a mortgage modification or loan modification is a much better alternative.Both a short sale and loan modification are much better alternatives to a foreclosure, deed in lieu or bankruptcy.