What is a loan modification?

This is the voluntary program initiated by the President to assist homeowners. It begins by visiting the website www.hopenow.com and contacting your lender.

What changes will they make to my loan?

The bank can lower your payments for 5 years. This is about all they do. They don't reduce the amount of the loan and they often add the reduced amount to the end of the loan, extend your loan for 40 years or you only pay interest during the 5 years.

Should I do a loan modification?

You should apply for this.  You may be discouraged that your house is worth less than your mortgage and you are not building equity, but if you can stick it out and take the loan modfication even if it is not a great deal-and none of them are. Did you think the bank was going to do you any favor?

Can I file for bankruptcy and still do a loan modification?

Yes, and sometimes that is the best option because the amount of your second mortgage and your credit card debt can be lowered in a bankruptcy and that would give you the breathing room to stay in your home.

My bank is taking a long time to do this and I am getting worried?

They are very slow and disorganized, but better than they were a year ago. In the meantime save as much as you can. If you are not making mortgage payments put them in the bank; do NOT spend that money.