I have been meeting with many homeowners recently regarding their financial difficulty in making mortgage payments. Everyone is asking me about how Obama's Homeowners Plan for saving homes is working in saving homes from foreclosure. Their comment is usually that everyone is getting some assistance, but us.

     I can only say that in reality very few people are receiving loan modifications and if they do their loan modification looks like a forbearance plan. The interests rates may be knocked down a notch, but the lender is asking the homeowner for a lump sum within six months to bring their payments current. The lender may be willing to roll the lump sum into the loan itself, but the lender definitely wants to see that the homeowner can make house payments at a reduced rate for about 6 months. Rarely is the principal reduced to reflect the decline in the house value. In Michigan, a lot of struggling homeowners accepted interest only or variable arms not really realizing what these loans would actually look like in 3 to 5 years. Many are now adjusting or needing to be refinanced. However, property values have plummeted and homeowners' salaries and income have been reduced substantially. What is the homeowner to do? Many are thinking maybe it would be better just to walk away, but that would ruin their credit.

     Although not a guarantee, I suggest that their best chance is to ask for a forensic loan modification. Their loan documents and appraisal is evaluated and audited. Many interest only and ARM mortgages have violations involving RESPA laws. Finding the errors or showing inflated home values can provide leverage when dealing with the bank or lender. A forensic loan modification bypasses the servicing company and is directed to the lender's legal team or attorney. A team of attorneys representing the homeowner talk and negotiate directly with the banks' attorneys. Business suggests working out a solution to keep the homeowner in their home if their income supports the handling of the mortgage and the hardship is over or at least the situation has stabilized. However, it may take from 1 to 3 months to obtain a loan modification. If the lender chooses not to negotiate then the homeowner has no choice but to just walk away or possibly obtain a short sale if a buyer can be found within the time frame of the foreclosure.

     Call 1.800.826.1929 for more information regarding Forensic Loan Modifications or visit http://ForeclosurePreventionInstitute.com. Foreclosure Prevention Institute, LLC will answer questions regarding foreclosures and loan modifications.

P.S. We never recommend that you not pay your mortgage even when attempting to obtain a loan modification.