Federal Loan Modification Law Center spokesman, Ralph Roberts, recently talked about the top myths concerning loan modification. He said many people have heard rumors which, sometimes, are perpetuated by passing them on to other people. Here are the five myths he addresses:
- "The bank wants me out of my house" -- Instead, banks make more money when you make monthly payments. Going through the foreclosure process costs them lots of money to include: losing the homeowners payments, attorney expenses, rehabbing the home, and selling expenses.
- "My credit score is so bad I won't qualify" -- Instead, this is not a refinance. Credit scores are not much of a factor in loan modifications. The major factor in a loan modification is your ability to make the payment.
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"I am not late on my mortgage payments so I won't qualify" -- Instead, many lenders are now working out loan modifications with borrowers who are up-to-date on their payments. This was true in the early days of loan modifications. Some lenders required you to be at least 61 days delinquent. However, lenders have had to change requirements to adapt to the market.
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"I would be better off walking away or declaring bankruptcy then modifying my loan" -- Instead, you are better off to save your credit and retain the chance to borrow money in the future.
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" It's too late. I have already received a foreclosure notice" -- Instead, as long as you still reside in the home you may have time to work out a loan modification. The sooner you take action, the more options you may have available. Contacting the lender demonstrates a good-faith effort.
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