Loan Modification Articles

Top 10 Questions About Loan Modifications

The loan modification process can be frustrating and confusing for many distressed homeowners. If you are considering contacting your lender about a loan workout to avoid foreclosure, you need to get as much information upfront as possible so you will be prepared and able to present your case in the best possible light. Programs and guidelines are changing and it is getting much easier for homeowners to get the help they need. To help you understand how the process works and what you can expect, here are the Top 10 Questions and Answers:

• 1. What exactly is a loan modification? A loan modification is a permanent change in one or more terms of a borrower's home loan, allows the loan to be reinstated, and results in a payment the homeowner can afford
• 2. Can the lender include late charges in the Loan Modification? Per HUD, the accrued late charges should be waived by the lender at the time of the loan workout-this varies depending on the type of loan-but always request a complete breakdown and description of all fees and penalties from your lender
• 3. How will the new government programs help me get a loan modification? The Federal government has allocated $75 billion dollars to subsidize lenders and servicers who offer a loan workout to their clients. Now, the banks will have a monetary incentive to offer help to qualified borrowers. In addition, homeowners who pay their new modified payments on time will be eligible up to $5000 credit to their loan balance.
• 4. How do I know if I will qualify for a loan modification? The number 1 criteria your lender is looking at is your ability to make the new modified payment now and in the future. You need to supply the lender with proof of your income, along with a complete and accurate financial statement detailing your income and expenses to show them that if granted the modification, you will be able to afford the new, lower payment
• 5. Do I have to be currently delinquent on my payments to get a loan modification? Most lenders are now accepting applications from homeowners who are not currently delinquent, but who are able to prove to their bank that due to imminent interest rate increases, they will no longer be able to afford the loan payment under the terms of their loan. It is advisable to contact your lender as soon as possible to start the loan modification process, regardless of if you are delinquent or not.
• 6. What is an acceptable Hardship situation? Each homeowner has a unique set of circumstances that caused them to fall behind on their home loan, but generally the lenders consider divorce/separation, loss of income, death of spouse, co borrower or family member, illness, job relocation, military service to be acceptable reasons to consider a loan modification. A compelling hardship letter included in your application is a very important part of a successful application.
• 7. Will a loan modification help me stop foreclosure? Yes, that is the goal-by working with your lender to find a loan workout solution, your loan is brought current and the foreclosure process is halted.
• 8. Can my missed payments be added back into my new loan modification? Yes, the arrears can be added to the new loan balance and spread out over the term to allow the loan to be brought current.
• 9. Can I do a loan modification myself or should I pay someone to represent me? That is entirely up to you and your comfort level with dealing with your lender, but also your current financial situation as most loan modification companies require a large upfront fee. Regardless of what you decide, the first thing you should do is learn all you can about the process, your legal rights, and what it takes to get your application approved.
• 10. So how do I get started to modify my loan? Before contacting your bank's loss mitigation department or a loan mod company, do your homework-learn as much as you can about the loan modification process so you can make informed decisions.

President Obama's Homeowner Stability and Affordability Plan offers real hope for millions of homeowners who need a solution to stay in their home. Not everyone will qualify however, and interested borrowers will have to complete loan modification application forms, provide proof of their income and meet certain eligibility requirements. Most lenders are participating in this new government subsidized plan, and homeowners are encouraged to learn how they can qualify and apply for a loan workout and avoid foreclosure.



Why a Loan Modification?

The simple definition of "Loan Modification" is a permanent change in one or more of the terms of a mortgagor's loan, allows the loan to be reinstated, and results in a payment the mortgagor can afford. Are the bank's and collectors swarming you daily for big payments? Is your house worth less then you paid? We can help you negotiate with the banks and keep your payments low!

Barrack Obama once stated "Families, he said, who are being preyed upon by predatory lenders. If you're protecting America, America should be protecting you from unfair bankruptcy laws." Some families are forced out of houses they have been in for their whole lives. This current economy is putting thousands on the streets and destroying their once called "dream" house. Foreclosure is the legal process in which a lender or secured creditor repossesses a home or real property after the owner has failed to comply with the agreement between the lender and borrower called a "mortgage" or "deed of trust." A loan modification can help you get your finances back on track

Some people try to refinance their home when they don't need to, resulting in large payments that they can't afford. Some try to take out loans, and weeks later see them multiply into huge payments. The broker's and lender's have no power to get you better rates. Some people buy their dream house for a fair monthly rate, but years later see increases that they just simply can't afford. We can help you, we can get you low fair rates that you can afford and pay on a monthly basis!

Loan Modification has changed millions of peoples lives. Corporate greed is certainly partly at cause for the current economic climate. Now these companies want to get bailed out. Top executives receiving bonuses that are actually tax dollars. Are you kidding me? Well, if that's the case then ordinary citizens should also be receiving some help.

The results are so beautiful, people go from loans over their head to a simple monthly rate. Loan Modification can simply change your life forever. Some people choose to forget their lenders, not open their mail from the lender's and straight out ignore them. Some forget how to prioritize their spending and create debt, some forget about their assets. All of these things can be a result of feeling overwhelmed by the mountain of debt that many are sitting under.

A quality loan modification could be the answer to your prayers.