Myth #1: You need an attorney or loan modification company to assist you with modifying your loan.

Truth:  In some cases, like when there is fraud, you should contact an attorney to help assist you with a claim against your lender. Most times though, you must realize that attorney’s and/or modification companies do not really negotiate any terms unless it’s for an extension of time. It’s usually a request not a negotiation. The lender can say no. In the normal process exercised by law firms and modification companies there is little to no negotiation. You can do this yourself. Preparing the proper package and make sure that you fit the guidelines established by both government programs and/or lenders, investors, and/or servicers is the key to a successful loan modification.

Myth #2: Loan Modification is a negotiation.

Truth:  In some cases, there is a negotiation with time, but a loan modification is not a negotiation. Lenders have their own internal and governmental guidelines they need to follow. The job of these loan modification companies is to simply show your lender that you fit into these guidelines to qualify for a loan modification program. This is done with correctly prepared documents.

Myth #3: Lenders would rather foreclose than modify your loan.

Truth: Mortgage lenders actually want to avoid foreclosure as much as homeowners do. Foreclosure is a costly, time-consuming process for them: they have to pay someone to handle the foreclosure process, fix up your house, and try to sell it. With declining house prices and the difficulty of selling real estate right now, a foreclosure is costlier than ever for lenders. Lending institutions do not want your house; they want you to pay on your account. If they are convinced that a loan modification will enable you to make payments on your house, they are likely to agree to adjust your mortgage.

Myth #4: You have to be late on your payments to get a loan modification.

Truth:  To obtain a mortgage loan modification, homeowners only need to prove that they are in imminent danger of defaulting on their loan. If you have experienced a recent financial crisis that will make you unable to pay your monthly mortgage payments in the future (such as divorce, loss or reduction in household income, or medical bills due to illness or injury), then you may qualify for mortgage reduction. Whether you are still current on your payments or have already fallen behind, a loan modification is still an option to prevent foreclosure.

Myth #5: If you’ve already gotten a foreclosure notice, it’s too late.

Truth:  Even homeowners who have received a foreclosure notice from their lender can still modify their loans. Homeowners can request loan modification at almost any point during the foreclosure process. The key is to act quickly, because your options narrow as time goes on. Again, lenders want to avoid foreclosure at almost any cost. If they can turn a loan from a non-performing into a performing account, even after sending out a foreclosure notice, then they will probably be willing to grant a modification to a qualified applicant (even late in the game).

Myth #6: Do I only have one shot of submitting a package to my lender, investor, and/or servicer?

Truth: This is a marketing ploy used by a lot of law firms and/or loan modification companies. Common sense tells you that people's financial situation can change on a monthly basis fueled by the current economic climate. Any changes to your finanical standing qualifies you to re-submit to your lender, investor, and/or servicer. They need to know your current situation to really help you during this time of hardship.

Myth 7#: If I have hired a law firm and/or loan modification company, should I cease talking to my mortgagee?

Truth: You should never cease talking to your lender, investor, and/or servicer. Communication serves two key purposes (1) keeps you informed of what is going on and (2) serves as a checks and balance to ensure that the company you hired actually is representing you to their fullest capacity. (3) Shows your lender your concern by communicating with them.