| What is a Home Loan Modification? | | | | such as a HUD Counselor or a reputable Attorney. |
| A mortgage loan modification is a process whereby | | | | Do I have to be late on my mortgage to qualify for a |
| the terms of the existing mortgage are modified to | | | | mortgage loan modification? |
| new terms that are more agreeable to the | | | | You do not necessarily have to be late on your |
| homeowner and lender. | | | | mortgage to qualify for mortgage help, a lower interest |
| What’s the basic idea behind mortgage loan | | | | rate, and a lower payment. Many lenders do require |
| modifications? How does this work? | | | | that you are late on your payment prior to considering |
| Lenders have been faced with staggering losses due | | | | a loan modification, however, under some programs |
| to so many foreclosures. Typically when a bank | | | | and with certain lenders, you do not have to be late on |
| forecloses on a home, the house has little to no equity, | | | | your mortgage, you merely need to demonstrate that |
| or is “upside down”. When you add the total | | | | you are experiencing enough financial hardship that |
| cost of foreclosure, including lawyer’s fees, the | | | | warrants a loan workout. |
| cose of keeping up the property, Realtor commission, | | | | What if I have lost my job and am currently |
| and the overall loss due to the house being upside | | | | unemployed? |
| down, it typically translates to a huge cost to the | | | | In some cases you may still qualify for assistance. It |
| lender. Rather than foreclosing on a home, in most | | | | is important to speak with your lender, a HUD |
| cases it makes more sense for a lender to help the | | | | counselor, or legal representation regarding your |
| homeowner lower their monthly mortgage payment on | | | | qualification and the possibility of getting a mortgage |
| their home loan and keep their house. By helping | | | | loan modification prior to beginning the loan modification |
| borrowers save their homes, lenders are able to still | | | | process. In some cases, the time may be better |
| earn interest on the existing loans, and do not have to | | | | spent looking for employment, and then contacting |
| face the huge cost of foreclosure up front. | | | | your lender’s loss mitigation department. |
| What are the benefits of a loan modification? | | | | What if I have completely let my finances go, and the |
| There are many possible benefits to modification of | | | | Sheriff is literally knocking on my door? |
| your loan, which include a reduction of your interest | | | | Speak with an attorney immediately. You may be |
| rate, changing your loan from an adjustable mortgage | | | | able to postpone the foreclosure with an attorney’s |
| to a fixed rate mortgage, reducing the principal balance, | | | | help long enough to get a mortgage modification |
| or the amount that you owe, reducing or forgiving the | | | | done. One stall tactic that is often employed is |
| amount that you owe in late fees and penalties, | | | | merely to send a qualified written request to your |
| changing the duration of the loan – e.g. to a 30 yr. or | | | | lender demanding a copy of the original note; without a |
| 40 yr. mortgage, and capping the monthly payment to | | | | copy of the note, your lender cannot foreclose. Filing |
| a percentage of the household income. | | | | for bankruptcy can also delay the foreclosure process, |
| Who ultimately decides whether or not to grant a | | | | however lenders are catching on and almost |
| modification of your loan? | | | | immediately combating this with requests for release. |
| Your lender ultimately makes the decision whether or | | | | The best thing to do is to speak with an attorney. |
| not to modify your mortgage. | | | | How long does it take to get a mortgage modification? |
| What about Government Programs, such as | | | | Typically, home loan modifications take anywhere from |
| FDIC’s Mod-in-a-Box, HAMP (Home Affordable | | | | 30-90 days to complete. Make sure that during that |
| Modification Program) under the Loan Modification | | | | time, you make an effort to still make your monthly |
| option of Obama Administration’s Making Home | | | | mortgage payments, and that you are prepared to |
| Affordable Program, and the new FHA – HAMP? | | | | document each and every statement that is made to |
| Will these force my lender to grant a loan | | | | your lender. |
| modification? | | | | How tough is it to get a mortgage loan modification? |
| It is important to remember that lender or bank | | | | In most cases it is very difficult to wrestle a |
| participation in these programs is voluntary. Yes, the | | | | modification of your loan from your lender. Often, |
| Government typically provides incentives under these | | | | homeowners will have to wait hours on hold, and be |
| initiatives to lenders to modify mortgages; however, it | | | | transferred from department to department. Even |
| may not necessarily guarantee that a mortgage loan | | | | Congresswoman Maxine Waters could not get |
| modification will be completed. Additionally, even if | | | | anywhere in helping homeowners after over two |
| your lender or servicer participates in Government | | | | hours on the phone with Bank of America and |
| Loan Modification Programs, your loan may actually be | | | | Countrywide. It is a painful ordeal that takes time, and |
| held by a servicer that does not participate in these | | | | even after a good deal of time is spent on getting the |
| programs. The very best thing to do is to speak with | | | | loan modification, if you do not fit your lender’s |
| a loss mitigation expert that can help you make sure | | | | guidelines exactly, you will not be granted a mortgage |
| that you qualify under these Government Programs, | | | | modification. |