Denied For a Loan Modification - Options to Avoid Foreclosure

If you are behind on your monthly mortgage payment and the clock is ticking, it's time to take action before the property goes into default. The home loan modification program is the first choice of remedy by most home owners, however, some applicants may not qualify for modification approval.

To be eligible for a loan modification claim, the distressed borrower must be able to prove financial hardship through temporary job loss, medical emergencies, divorce or other extenuating circumstances that do not include long-term unemployment. For such home owners that do not qualify, there is still hope around the corner.

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The best time to consider a remedy for an imminent foreclosure is to take action at least six months before the real crisis strikes. One option is to hire a real estate agent or broker that specializes in short sales to move the property quickly at a bargain price. The seller has a good chance of transferring the property ownership before delinquent payments affect the credit score, and the process may be faster than waiting for the finalization for a loan modification.

Your short sale representative should have expert negotiating skills and a solid relationship with the lenders. The short sale final offer may or may not be accepted by the lender, and should the seller fall below the mortgage balance, he or she will be responsible to pay the difference.

Another option if you are denied access to a loan modification application is to consult with a bankruptcy attorney. The dreaded bankruptcy record on the credit report has more bark than bite. Once believed that a bankruptcy would ruin a person's credit for 10 years, the truth is that a charge-off of massive debt can open the doors to a fresh start with many lenders. If you are pondering a bankruptcy remedy, be sure to have a consultation with an expert in this legal field. Bankruptcy proceedings can take several months, so time is of the essence to save a home from a Notice of Default. Foreclosure proceedings will normally apply after three consecutive payments have been missed.

If your credit is solid and you have sufficient equity in the property, a re-financed mortgage loan may bring the monthly payments down to size. This tactic works well for home owners that have a short-term loan and wish to extend to a 30 or 40 year fixed loan. If you have an ARM that is ready to adjust, it may be time to see your trusted mortgage broker or banker for a re-finance on the property. However, the refinance charges can be steep, so be sure you have the cash on hand or are able to carry the fee on the back of the mortgage. Homes that a break even or are upside down on the loan may not qualify for the re-financing option.

The home loan modification is a useful tool to lower the monthly mortgage payments, however, the process is not for everyone. Not to worry, as the real estate and banking industry understands the current trends and has made multiple ways of escape to assist the distressed borrower.

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