Having difficulty with your mortgage or home equity loan? There IS help available. There are a number of people, businesses, and agencies who may be able to help you with loan modification, or adjusting the principal, interest rate, or payment schedule (or all three!) of your loan so that you can afford it.

Your first call to should be to your lender—you may be able to work something out directly with it. However, if you can’t, you may be able to find assistance from:

Mortgage brokers
Loan or credit counselors
Attorneys
Each has pros and cons.

Use a Mortgage Broker for Loan Modifications?
A mortgage broker often does not so much help you modify an existing loan as find a new (better) loan to replace it. They usually work with a number of different lenders.

Pros: Typically very knowledgeable about lending; can “shop” your situation out to many different lenders, to find the best deal for you; only paid if you secure the loan.
Cons: More-or-less one-trick ponies—if you are not a good candidate for a new loan, there may be little else they can offer you. Also, their incentive is to sell you a loan, which is not necessarily the same thing as improving your financial situation.

Using Credit Counselors and Mortgage Modification Specialists?
There are too many different types to go into, but they break down along two main dimensions:

1. Ones who only provide advice vs. ones who will try to negotiate with lenders for you
2. Ones that are for profit companies vs. not-for-profit (or nonprofit) entities, such as community organizations

This is the catch-all-category, which includes anyone providing loan assistance who is not a lender, a broker, or an attorney. It’s been a fast-growing category, and, unfortunately, has attracted many scam artists. Many legitimate providers have suffered from growth pains, such as poor hiring, or insufficient management and training. Also, fees vary as widely as quality—some are very affordable, others more expensive than attorneys or brokers.

Pros:      Focused on loan modification, or reducing the burden of your loan, which is what you need; should be knowledgeable about government-supported or -encouraged programs to help in-trouble homeowners.
Cons:     Quality and honesty varies widely, so it’s important to get personal recommendations if at all possible; often only knowledgeable about loan modification. Also, these are “middlemen”—they cannot themselves typically originate or modify a loan, but must work with a lender.

Having an Attorney Perform a Loan Modification
Many lawyers specialize in whole or in part in helping troubled debtors; some focus specifically on financially troubled homeowners. They bring with them their legal knowledge and training as well as their ethical obligations to their clients.

Pros:      Can counsel and advise on a wide range of options, including bankruptcy as well as loan modification; if the debtor is being unfairly or improperly harassed by lenders, or lenders are not obeying the law or the terms of the loan agreement, the lawyer can defend the debtor or even bring counterclaims on the debtor’s behalf.
Cons:     Unlike a broker, cannot directly originate a new loan, but must work with lenders.
Attorneys are also often skilled negotiators, since so much of the practice of law is negotiation; as a result, even though they themselves are not lenders, they can often negotiate a new or improved loan.