The loan modification business is getting such hype you'd think it was the next Batman movie.
Turn on the TV or radio, or even pass a bus, and you'll be exposed to another advertisement by credit counselors, lawyers and others who offer to work miracles with a mortgage. For a fee.
But you don't have to pay for counseling or legal help -- they're free, under federal programs that you support with your taxes.
And yet, no matter how upbeat the commercial hype or how much free help is available, the final answer may not be welcome -- many Californians with mortgage troubles will not get a modification, even under a subsidy program the Obama administration debuted this month.
But government pressure, proposed law changes and the ever-increasing burden of foreclosed housing could make loan modifications available to more homeowners as the economic crisis trudges on.
Here is a consumer's guide to loan modifications: what's available, who's eligible and how to find help.
It's time to rip off the mask.
What's a loan modification?
It's an adjustment to a home loan -- sometimes temporary -- that lowers the monthly payments.
In the vast majority of cases it involves only the interest on the loan, not the principal.
For example, if the interest rate on an adjustable loan has jumped to 8%, a modification might take it down to 6% or lower for five years.
Another type lowers payments by adding years to traditional 30-year loans, possibly in combination with an interest rate decrease.
"We've seen 40-year loans at 5% interest," said Larry Reed, a counselor at Los Angeles Neighborhood Housing Services.
Are there other loan breaks?
Banks are offering loan strategies that aren't strictly modifications but could keep the foreclosure wolf from the door. In many cases they involve stalling tactics.
One is called a forbearance. It's a temporary suspension of loan payments to give a borrower a bit of breathing space. Usually it lasts just a few months, then the payments start again.
Don't confuse forbearance with forgiveness -- you're expected to eventually make good on all the payments you were allowed to skip.
Another tactic is a repayment plan, often used in combination with a forbearance. The plan lets you catch up on missed payments by having you pay extra every month until the skipped money is made up.
Who gets a loan modification or other type of plan?
