Sunday, 22 March 2009

How to Ask For a Mortgage Rate Reduction

Asking for a mortgage rate reduction can be tricky business. What lender in their right mind would give you more favorable terms on a contract that you already signed off on? The kind of bank that isn't sure that they have their "i's" dotted and their "t's" crossed, that's what kind!

Asking for an interest rate reduction is still not a simple process. It often takes as long as 6 months for the entire process to take effect and in the interim you can expect to be expected to pay the original rate. Many times, banks won't even work with borrowers until they are delinquent on payments and almost in default. It's only then that the bank realizes that the borrower may indeed be losing their home and in fact needs a mortgage rate reduction. There is a better way, though.

Attorney based loan modification companies are the powerhouse of the loan modification industry. Instead of asking for a mortgage rate reduction, attorneys flex their muscles a little and demand a rate reduction for their clients. This is much more effective.

A few ways that this is accomplished are:

An attorney sends out a QWR to the lender. A QWR is a written legal document that in effect sepinas the file for review. This lets the bank know that we mean business. It means that the lender must go through their files and send the attorney the originally signed documents from closing for forensic auditing.
Also, an attorney will send out a letter of representation to the borrower's bank letting them know that they have obtained council. This in turn takes away the ability of the bank to use high pressure techniques to pressure the borrower into paying their inflated mortgage payments. It also removes the right to report to the credit rating agencies while the case is under review. And, in most cases, this can also stop, or at least delay, a foreclosure sale or trustee sale. At this point, any and all correspondence with the bank must be done through the borrower's representative (the attorney).

During the paper filing stage, an attorney generally uses a forensic accountant to go through the original documentation and look for errors and signs of predatory lending. [As a side note, I'll tell you that in my office, on average we're finding 9 errors per loan.] Once the forensic accountant is done finding errors the attorney can go back to the bank, only this time they'll have a little leverage to negotiate with. You see, every error on a file could cause the bank a fine of up to $2000 per occurrence. So, you can see the amount of leverage this brings to the table.

At this point, there is a significantly greater chance that the lender will grant a mortgage rate reduction, and sometimes, mostly on second mortgages, even a principal reduction for the borrower.

For more information on how you can ask your bank for a mortgage rate reduction, please visit

We help home owners renegotiate the terms of their loans. Our service is NOT credit driven and does not require that a borrower be behind on their mortgage. For more information on how we can help you lower your monthly payments and keep your home from foreclosure, please visit:

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