DIY Loan Modification Kits: An Explanation

Posted by MoneySavvy on Jun 2nd, 2010 | no comments home title

If you’re facing the possibility of foreclosure, it’s important to take action to prevent it quickly. If you can work something out with your lender, you will be able to keep your home. It’s best to have an experienced attorney on your side, but if you’re struggling to make your mortgage payment, chances are good that you can’t afford one.

Homeowners can negotiate directly with mortgage lenders to get a loan modification that will prevent foreclosure. But that can be a long and complicated process. There’s lots of paperwork to fill out, and the homeowner must have proof of income, expenses, insurance and more. For those who have never been through the process before, it can be quite overwhelming.

One possible solution is the purchase of a do-it-yourself loan modification kit. These kits are designed to help homeowners negotiate with their mortgage lenders and provide all of the information needed in the proper format. But can they really help?

What’s Included

There are many DIY loan modification kits on the market, and each includes different things. But in general, here’s what you can expect to receive in such a kit:

Scripts for negotiating with lenders

Budget worksheets

Hardship letter templates

List of documents that must be submitted to the lender

Information about the Homeowner Affordability and Stability Plan

Details of possible loan modification scenarios

Some of these kits are in the form of a book or ebook. Others include software that will perform calculations and generate forms and letters for you.

Watch Out for Scams

With the rise in the need for loan modification services has come a rise in the number of scams associated with them. This is quite unfortunate, seeing how those who are fighting to keep their homes can hardly afford to lose money to scammers. When seeking DIY loan modification help, it’s important to be careful of who you give your money to.

One of the first things to look for when comparing kits is a guarantee. There are no guarantees when it comes to loan modification. If you do not qualify, your lender will not modify your loan, no matter what kind of kit you use. If anyone tries to tell you otherwise, there’s a good chance that they’re just out to get your money any way they can.

Another red flag is when someone asks you to sign over your deed or asks for a power of attorney. Some scammers claim that they will make payments on your behalf if you sign one of these documents and make payments to them. But there is no logical reason to operate in such a manner.

There are scams out there that target those who are seeking DIY loan modification. But there are also some helpful kits available. Before you buy, do some research on the product and the company that offers it. If everything checks out and the price is reasonable, there should be no harm in proceeding. A DIY loan modification kit is no substitute for an experienced attorney, but it can help you save your home at a fraction of the cost.