Monday, June 8, 2009

The Mortgage Modification Agreement – Know Your Facts

Once you have taken the step to improve your monthly financial situation by signing that mortgage modification agreement, things will feel a lot less stressful. But before you put pen to paper, be sure you know what’s going on. Although financial institutions are forced to maintain totally legal and above-board agreements, it doesn’t mean there aren’t loop-holes.

1. If it feels wrong, question it:

Too many of us have learnt to ignore our gut instincts in modern life. Often, because we are just so relieved to have the financial stress taken from our shoulders, we ignore items in contracts that are patently unfair. Once you have signed the contract, you have said that you are happy with the terms. No matter how desperate you are, do not allow this to happen. There is also the classic situation where you don’t understand everything written in fancy legal-speak and are forced to depend on the lender to explain it to you.

This is a very bad move as he will only highlight the good things and simply skip over things that might not benefit you. A rising trend seems to be when even totally legitimate institutions make people sign a “mortgage modification agreement” and somehow manage to put very high legal fees in there, without ever being clear on that fact.

Suddenly you may find yourself having to pay the original exorbitant monthly payment that you’ve been struggling to pay in any case, just to pay off some vague, random legal fee levied by the lender. Sometimes, it turns out that the monthly payments have not been lowered at all, and interest rates have risen to some impossible level.

2. What’s in a name?

It is very important to find a legal advisor with a good name to review the contract for you before you sign it. Even if that means calling him up, asking what he charges per hour and physically sitting there while he reads it. People in the legal profession are trained to look out for dangerous phrases and questionable terms. Do not depend on the lender’s legal representative. Although they are probably mostly fine, they don’t have your best interests at heart. Always remember that just because this thick, impressive document has the name “Mortgage Modification Agreement” written on the front, it doesn’t mean that’s what it is. What you see is not always what you get.

3. Use a lender you trust:

If you have been a member of a certain bank for a long time and they offer this service, rather go to them. They are far more likely to nurture an existing customer who has banked with them for a long time rather than an unknown person.

By: Lindsy Emery

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