Will doing debt settlement effect doing a loan modification?

Debt settlement occurs when you make a monthly payment to either a settlement company or yourself and you use that money periodically to negotiate settlement in full for lesser than owed. The result is this process will wreck your credit. I don???t think any bank will loan you money when your credit score is going down due to debt settlement.

I think what you are asking about is debt consolidation. Debt consolidation occurs when you borrow a larger sum of money from one creditor to pay off many smaller sums to multiple creditors. This process will probably give you a single monthly payment that is lower than all the other payments added up. This process doesn???t improve your credit much but it won???t wreck it like debt settlement will. I have found that most consolidation loans want collateral like a second mortgage. Most banks won???t give you a signature loan to cover many smaller debts.

I think you are throwing in loan modification as an added twist. I have found it difficult in my experience to get any bank to actually modify the terms of any loan I have ever had. Most of them want you to go through the entire process to get a new loan funded which would pay off the old loan. You would get the new terms with the new loan. A good example of this is a refinance on a home mortgage. Many people want to grab that lower rate when it comes around but the banks make you go through the mortgage process to get it as opposed to just modifying your existing mortgage to a lower rate. They use this process to run a new appraisal, get new inspections and of course they collect the closing costs again.

I am talking about doing debt settlement for my credit cards which I am now paying $2,000 a month in payments and it will be reduced to $1,000 a month. Then taking my 1st mortgage and doing a loan mod to reduce my payment on the 1st.
The debt settlement will help me reduce my monthly payments on my credit cards which in turn would allow me to make my payments on my 1 st mortgage.
Does anyone know if they will work well together?

Loan modification and debt settlement go hand in hand. As you stated earlier, lowering your DTI significantly helps with a Mortgage modification application.

I have been in Mortgages and Debt Management for quite some time now. The original reply was correct, the mortgage modification is not something that was readily available in the past. With the current financial climate as it is, lenders are trying their best to help customers who have fallen into a financial hardship...even if that hardship is simply financial mismanagement. It costs the bank tens of thousands of dollars to foreclose on a customer. Multiply this by the thousands and thousands of loans in the portfolio that are late and you are talking about an amazing number.

Also, debt settlement will have negative effect on your credit. One should always be cognizant of their credit rating. However, I think you know that your credit has already taken a pitfall. You probably also realize that good credit is most useful when attempting to obtain more debt, not when you are trying to get rid of it.

Please make sure to work the Debt Settlement side first. This way you will already show the bank that arrangements are being made for a repayment program.

I want to make sure you have considered all options with the debt settlement. If you have any questions or concerns, please feel free to PM me.