Now that we are well ensconced in this mortgage financial meltdown…finally the banks and lenders are starting to work with home owners to assist them in staying in their homes.

Loan modification, a process where the homeowner applies to the lender for mortgage relief, has recently become a viable option. This is not something new…but rather the major lending institutions have finally come to the realization that it is in their best interests to work with the mortgagee that is experiencing financial hardships.

When a loan goes into foreclosure, the value of the paper immediate drops by a minimum of 50 percent. Couple that with legal fees that can easily exceed $20,000, it is easy to understand that loan modification is not only a viable option for the financially challenged homeowner, but it makes sense from the standpoint that we need to be as proactive as possible, as a community and nation, to do what we can to get under control the tsunami of foreclosures so that we can get this economy back on its feet.

Loan modification will not help everyone. It is not a blanket panacea. There are certain criteria that the distressed homeowner must qualify for, to be an applicant for loan modification. If they do not meet these qualifications, then other options like short sale, foreclosure, or bankruptcy are alternatives.

Homeowners must beware that, unfortunately, there are predators who attempt to take advantage of the homeowner and ultimately make an unfortunate situation worse. They will charge up front fees and make promises that may or may not be viable options. In Nevada, loan modification falls under the State Mortgage Lending Division. If an individual wishes to perform loan modification on their own in the State of Nevada, they must become licensed by the state and put up a $100,000 bond. You cannot charge up front fees and must provide the client with a “Right of Rescission” clause, appropriate for the state law. It is advisable for the homeowner to check with their respective state to verify that the person or entity they are considering is a legitimate, licensed firm.