| What do you know about loan modification for your | | | | Note that "my Realtor lied to me" and "my loan officer |
| mortgage loan? A lot of people have some beliefs | | | | broker lied to me" are not on the list of hardship |
| that may not be true. This article will help dispel some | | | | reasons. |
| of those beliefs. | | | | The borrower has to be able to afford the house, just |
| Myth #1: Homeowners must be behind in their | | | | not the current mortgage payment. Therefore, the |
| mortgage payments. Not true! A person can qualify for | | | | household must have incoming wages - someone |
| a home loan modification even when their payments | | | | must be working and earning enough to support a |
| are current. Many people were given adjustable rate | | | | newly defined mortgage payment. |
| mortgages (ARMs) between the years of 2002 - | | | | Myth #3: Only loans on the primary residence are |
| 2006. These loans had very low initial interest rates, | | | | eligible. Again, not true. An investor with multiple |
| known as teaser rates. | | | | properties or an owner of a commercial property can |
| The rates were appealing and the thought of owning a | | | | be granted a loan modification. These types of |
| home lured people into these types of loans. The | | | | mortgage modifications usually require more time and |
| interest rates were scheduled to increase after a | | | | are generally harder to get. However, these situations |
| certain amount of time, usually 3-5 years. The | | | | are eligible. |
| borrowers were told that they could easily apply for a | | | | Myth #4: Homeowners must pay upfront. False. Many |
| conventional loan before the adjustment date. They | | | | people were burned by unscrupulous companies which |
| would be on their job for a long time, showing stability. | | | | employed this "pay upfront" policy and that preyed on |
| They should be earning more money at the end of | | | | desperate folks wanting to save their homes. |
| those years due to wage increases and cost of living | | | | Legislation has now been enacted to prevent collection |
| adjustments (COLA). The new homeowners would be | | | | of monies before services are rendered. Money |
| able to qualify for a conventional loan to replace the | | | | should only be collected when the homeowners know |
| ARM without any difficulty. | | | | if they have a solid opportunity to qualify for a loan |
| This scenario did not play out for many homeowners. | | | | modification, and not before. |
| A worsening economy, tightening financial lending | | | | So how do homeowners/property owners find out if |
| policies and a declining real estate market all played | | | | they have a solid opportunity for a mortgage loan |
| factors for people not being able to convert ARMs | | | | modification? The process is called a forensic loan |
| into conventional loans. Houses upside down since the | | | | audit. Lawyers look at the loan paperwork and |
| time of purchase. Layoffs. Another wave of | | | | determine if the loans were written in compliance with |
| foreclosures are set to hit the market this year. | | | | federal and state lending laws. Up to 85% of loans |
| Wouldn't it be easier to keep your home, if there is a | | | | written between 2002 - 2006 contain errors. The best |
| way? | | | | way to have a mortgage loan audit done is through an |
| Myth #2: A homeowner can qualify for a loan | | | | independent agency, not your own lending institution. |
| modification if s/he has lost her/his job. No. Not true. It is | | | | (There is an inherent conflict of interest for your bank |
| true, however, that the borrower must be suffering | | | | to examine its own paperwork.) |
| from sort of hardship, whether temporary or | | | | Some companies charge anywhere from $400 to |
| permanent. | | | | $1000 to perform a loan audit. Is it worth it? Yes. If |
| Hardships include, and are not limited to: | | | | mistakes are found, the forensic loan audit will add a |
| Death of the Borrower, the Spouse, or of the | | | | legal punch when submitted to the bank for a loan |
| Co-Borrower | | | | modification. The best part of this article is to inform |
| Illness of the Borrower or Family Member | | | | you that there are companies who perform the |
| Loss of work hours | | | | forensic loan audit for free. Find out, for free, if your |
| Inability to rent or sell the house | | | | loan has mistakes that are costing you money in the |
| Job transfer | | | | form of higher than necessary monthly payments. |
| Failed business | | | | Arm yourself with knowledge so you can make an |
| Reduction in pay | | | | informed decision as to whether a loan modification is |
| Incarceration | | | | right for you and your family. A loan modification allows |
| Military duty | | | | you to stay in your home. Learn the facts about your |
| Divorce or marital separation | | | | mortgage loan. |