Loan Modification is arguably the most effective tool you can use if you are behind on your mortgage and in midst of a financial hardship to save your home from entering foreclosure. With a loan modification, the mortgage loan is restructured so that it is affordable and can fit comfortably into your budget rather than being an overwhelming monthly drain on already tight finances.

Loan modification agreements come in different forms but quite frequently they involve the reduction of mortgage's interest rate for a specified period of time so the homeowner can continue to make payments and stay in the home. Loans can also be modified so they have a longer amortization term (e.g. 40 year instead of 30 year) which will cause the payments to decrease. Principal writedowns are rare, but they do indeed happen where the bank actually writes down some of the principal amount.

Majority of the home loans needing modifcation today are conforming mortgage loans made by big banks such as HSBC, CitiMortgage, Countrywide, Household, IndyMac, JPMorgan, Wells Fargo, Washington Mutual and Bank of America and based on Fannie Mae and Freddie Mac guidelines. If you are behind on your mortgage and do not see any relief in your near term future, you can benefit from a loan mod.

For our clients experiencing challenges with unsecured debt repayment (credit cards, etc.), our sister company, Total Debt Services, is ready to work with us to, not only deal with the debt problems but, help our clients qualify for a mortgage while still in the debt settlement program!

Debt settlement programs are designed to assist consumers with a financial hardship to reduce their debt through debt negotiation. Debt settlement specialists will negotiate a less than full balance settlement to resolve the debt. Credit cards, medical bills and other personal unsecured lines of credit may be eligible for a hardship settlement. To discuss debt settlement and find out what your aptions are to get out of debt contact a debt analyst today. You can call 866-671-DEBT (3328)

The home foreclosure crisis generated by subprime lending continues to get worse by the day. The trouble started a few years ago when mortgage interest rates dropped to staggering lows and low-income buyers could purchase a home with the help of a subprime loan – despite their lower credit scores. Today, those rates have skyrocketed up to 12-13 percent, leaving those buyers, and often, first-time home owners, few options. As a result, foreclosure numbers continue to climb.

“If you do the math on a $130,000 house, a $900 per month payment suddenly increases to $1,300 per month,” Jim Ross, president of Total Debt Services (TDS) said. “Most people are living day-to-day, trying to pay higher heating bills or higher gasoline bills, and they simply cannot pay the extra $400 each month. People often stop paying credit card bills and car notes just to save their homes – essentially putting them in even more trouble.”

And because the housing market is in a downturn and the high loan to values allowed on these loans, selling the house isn’t an option either since they aren’t going to get what the house is worth and closing costs alone can be in the thousands of dollars. Hardest hit are borrowers in states like Texas and Michigan, which led the country in the number of new foreclosures in 2006. National and state lawmakers are currently drafting bills in an attempt to stop the bleeding, but Sandra Braustein, director of the Federal Reserve’s division of consumer and community affairs said problems with subprime mortgages could last for another two years.

This disturbing trend has highlighted the importance of debt-settlement programs in the United States. With the help of one of these programs, people can often pay about one-half of the minimums on their credit cards, freeing up additional money to put toward the mortgage and keeping them out of bankruptcy.

“The natural reaction is to let your credit card and other payments slip in order to keep your home,” Ross said, “but all that does is put you into even more financial troubles. If you enlist the help of a debt-settlement program and address your credit problems, there’s a good possibility, depending on a number of variables, that you could save your house and eliminate your debt at the same time.”