When to Accept a Loan Modification Offer

By: Timothy McFarlin | Published: July 2nd, 2010 | Category: Loan Modification

Many borrowers who attempt to have their loans modified are often clueless when it comes to knowing when to accept a loan modification offer.  Many borrowers think that there is some kind of “take it or leave it” attitude in place with many lenders, meaning if the borrower refuses to accept the lender’s first offer, then the lender will stop trying to assist them and continue with a foreclosure.  This is not the case at all.  While some lenders may have a take it or leave it attitude, nothing says a borrower has to accept the first offer made by the lender or face foreclosure.

When a lender offers an offer to modify and stipulates the terms of their offer, they are extending nothing more than an offer.  In most cases, the offer will come through the mail with forms attached that must be returned to the lender within a certain number of days before the offer becomes effective.  This added urgency often makes many borrowers accept the terms without even realizing that they are closing down all access to future negotiations regarding their loan modification.

The best thing a borrower can do when their lender returns with an offer to modify is get in touch with an attorney ASAP.  If the terms of the modification are not in the best interests of the borrower, the attorney can open up formal negotiations and delay the foreclosure process while the negotiations are being conducted.

A person should never be told when to accept a loan modification offer.  If the offer will help the borrower, then it should be taken.  If, on the other hand, the loan modification offer will do little to nothing to help the borrower, then the borrower shouldn’t accept.  There is no point in taking an offer that is destined for failure.

When the borrower refuses to accept a modification offer from their lender on the grounds that the modification will not provide enough assistance, the borrower should be prepared to submit a counter offer.  The counter offer will be terms of a loan modification that the borrower would agree to if the lender is willing to accept those terms.  In most cases, the lender won’t accept, but that’s the whole point of a negotiation.  Even though the lender may not accept the terms offered by the borrower, the lender will still have a better idea of what kind of modification the borrower was looking to get.

The only downside to negotiations is that they can become quite lengthy.  Also, if a negotiation gets drawn out, the lender will most likely have to request updated financial information over and over again until an agreement can be reached.  This is done to ensure that the borrower still needs as much help as they claimed from the beginning of their request through to the negotiation, so borrowers are urged to maintain strong financial records through the entire process.

If the lender is too stubborn to help the borrower, litigation may be necessary.  As long as the borrower and their attorney feel strongly enough about their argument to pursue litigation, then the borrower should not agree to any terms offered by the lender that are less than satisfactory.

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