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by Michael Licamele

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This article on loan modifications discusses options available for home owners who are currently have mortgage payments that are too high but can not refinance because either their credit is poor, they can not document their income or the value of their home has dropped significantly. For help right now, click here.

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Editor's Note: For details on the Obama Housing Affordability & Stability Plan announced February 19, 2009, click here.

With the many recent laws passed to help home owners since the beginning of 2008 and many more to come, home owners have an increasing number of resources and tools to help them keep their homes. If you have a mortgage payment that is too high for your current income or if your loan amount is much higher than the current value of your home, you probably can benefit from a loan modification or short sale program. For immediate help, submit your help request here. There are several types of loan modifications available depending on your specific financial situation:

This option is used when there has been a temporary reduction in income or increase in expenses. We have many types of modifications, but they typically add the delinquency onto the balance of you loan and re-amortize the loan. Interest rate and term may also be adjusted in order to make your loan more affordable.

Selling your home is one solution when there is long-term difficulty making the payments. Unfortunately, property values can decline, causing a difference between the current market value and what is owed on the loan. The lender may accept less than the total amount rather than pursuing a foreclosure. The lender may request a contribution be made to reduce the total loss but that is always a negotiation. You must list the property for sale at the fair market value and forward any offers to the lender for consideration. Please note: Acceptance of any offer will be subject to lender approval. Most lenders allow for Realtor commissions and closing costs to be paid from the funds received from the sale.

A repayment plan allows you to make a regular payment plus a portion of the amount past due each month over a period of months. The repayment plan is based on the financial information provided and it may require a deposit toward the amount past due.

If all available options have failed and you are unable to sell your house, you may be allowed to sign title to the property over to the lender. You must have clear title to the home with the exception of the first lien.

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