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Request a Loan Modification Without Being in Default?

A home mortgage loan modification is generally reserved for homeowners whose loans are already in default by at least two or three months.  This means that many homeowners, because of their lender’s policies, must knowingly allow their loans to default before their application for modification can be reviewed.  This worries many homeowners who would rather not stand in the sidelines while their credit scores fall for having missed their monthly payments.

The thing to keep in mind about lender policies is that they aren’t set in stone.  Lenders create policies for two reasons, to stay legal and to stay efficient.  It is easier to create a blanket policy that every employee can apply without needing the assistance of a supervisor than to expect all supervisors to tend to every question their subordinates have.  Managers create policies in an effort to answer fewer questions while supervising more people.  Employees are generally taught to handle problems with customers at the lowest level, and in many cases, a supervisor won’t get involved with a borrower unless the borrower is persistent in asking to speak with them.  What few homeowners realize is that with enough persistence they can talk with somebody high enough on the totem pole with the authority to make an exception to every policy that is not rooted in law.  Investing the time necessary to talk to the right person is difficult for the average homeowner who is often given the runaround by lower management until they hang up their phone or walk out of their lender’s offices frustrated.  Attorneys know how to talk with lender representatives until they find the one that can help their client the most.  They know how to apply the law until the representatives have no other choice but to pass the case along to a supervisor.  Lawyers are so skilful, in fact, that many lenders have created policies that strictly forbid lower level employees from discussing the matters of a case with an individual who identifies him or herself as an attorney. 

This does not mean that borrowers should start claiming to be attorneys just so they can move through the phone lines faster.  That would be illegal and will only create problems.  What this does mean is that borrowers should hire a local attorney as quickly as possible to represent them through their quest to modify their loan. 

A homeowner who is able to recognize their impending financial trouble and seek the assistance of a foreclosure attorney may not have to watch their credit score take a hit while the lender considers whether or not to modify.  Many lenders will agree to approve a home mortgage loan modification before a borrower is in default as long as enough evidence can be provided that would justify the modification.  An attorney can provide advice as to what the most acceptable form of evidence would be, but in most cases any document that shows a decrease in income and an increase in debt will be sufficient.

Borrowers who think they may face foreclosure in the future are urged not to throw in the towel by skipping their payments just because they think a foreclosure won’t be avoided.  Lenders are more willing to work with responsible borrowers who make honest efforts to pay off their debts.  Lenders are more likely to help a borrower who has always been persistent in the past than one who shows a financial history that resembles a roller coaster.