Loan Modifications Are a Mixed Benefit For Lenders

Looking for a solution to the mortgage crisis and the disaster that was caused by the subprime mortgage blowup, governmental agencies as well as lenders have discovered that loan modifications are perhaps offering the best possible solution for the bank as well as the consumer. For lenders, however, loan mods are a mixed benefit.

The guidelines set forth are fuzzy and even though there are few hard and fast requirements, by and large it is left up to the individual mortgage lender to define the scope of their programs. Training bank agents to deal with modifications is not easy since each case is entirely different, and the fact that the entire process is extremely time consuming lends to the headaches experiences by the mortgage industry.

On the other hand, the fact that instead of showing bad debts on their books the lender will have active and paying loans is good news, especially in light of recent FDIC investigations. Investors prefer to do business with banks not weighed down with bad debts and pending foreclosures, and thus it is in the best interest of any bank to work with consumers whenever possible to keep their records showing profits rather than loan failures.

The problems arise when consumers seek to negotiate loan modifications on their own. Not knowing the ins and outs of loan negotiations and not truly understanding the process, they often slow down the entire procedure unnecessarily. In addition, at times there has not been any financial counseling and a modification that is negotiated today might fall flat and become ineffectual within a few short months, in which case the homeowner is once again in the same situation but no longer eligible to modify their loan.

Usually lenders find that negotiating with a professional negotiator makes the process easier, streamlines business, and of course sets up the majority of consumers for the best possible loans, since most professionals are open and up front about the feasibility of the modification the borrower is about to undergo.

Upsetting the industry and the entire process are those negotiators who operate fly by night enterprises and fail to understand RESPA, TILA, or the banking regulations that govern the modifications of existing home loans. Consumers are urged to be careful and exercise due diligence when interviewing potential loan to act on their behalves. You can find out more about loan modifications on the site that we recommend: loan-modification411.com.

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