What is Loan Modification?
Loan Modification, sometimes referred to as loss mitigation, and is receiving lots of media attention. The United States is in a severe mortgage crisis. Millions of homeowners are trying to deal with toxic, adjustable rate mortgages and they are realizing that loan modification might be the only way to remedy the problem. This term applies when your lender modifies your mortgage (it’s the same loan you have, but changes are made only to the note) in order to work better with you and make your mortgage more affordable. Modification to your rate, balance of the loan, delinquent fees owed, and the term of the loan can be addressed by the Lender. Previously, this was only used when a borrower was delinquent, but now we see it being used proactively before someone is delinquent. This is turning out to be the most effective way to help people avoid foreclosure.
- A Loan Modification changes the existing mortgage note and offers the client a new start in managing their home. Accounts are updated immediately.
- With a loan modification, you can take the mortgage you now have and change the interest rate and payment requirements in order to receive a fixed rate. A change in rates and payments does not result in the need for a new closing, legal fees, survey, appraisal, or taxes. If you "refinance" a loan, however, you will be required to have a closing and required to pay a variety of fees and taxes.
- Lenders are willing to negotiate with borrowers when they are facing financial difficulties and can't take advantage of other financing options. The Loan Modification process demonstrates to the lender why it would be in the lender's best interest to agree to a workout arrangement. As a result, the lender will reduce the loan interest rate, reduce monthly payment amounts or change other loan terms to allow for an affordable loan to prevent homeowner foreclosure.
- Loan Modification brings the two sides of the problem loan together to mutually agree to a workout that creates new and better loan terms which are both realistic and affordable. The goal is that the new loan will enable the borrower to meet their obligations. With a detailed, personalized financial analysis, resulting in loan modification, the homeowner’s hopes and goals can be achieved. Clients of loan modification services quickly realize that they are now able to accept a loan that is affordable based upon their current financial situation, without the stress and threat that might come from another foreclosure.
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How Does Loan Modification Work?
We will review the alternatives that will allow you to keep your home. The essential person to avoid foreclosure is you. Open and candid conversation with our loss mitigation specialists will help us to solve your mortgage default without going through with foreclosure.
Generally, there are four options available to a homeowner in distress:
- MODIFICATION: In some circumstances, an investor could be allowed to add the delinquent amount to your loan balance or temporarily reduce the interest rate, as well as the principal amount, to assist you in resolving the default and restoring your credit status.
- FOREBEARANCE: A Forbearance Plan is a repayment agreement between you and your lender. Documentation supporting your monthly income and expenses is reviewed. A plan is developed, and then a written proposal provides for payment of one full monthly payment and a portion of the delinquent amount due on your account. The goal of the plan is to allow you to resolve your default over a period of time, reinstating your mortgage, while allowing you to maintain your normal monthly living expenses.
- PRE-FORCLOSURE SALE: Loan Modification frequently involves working with homeowners who, due to a change in employment or other life events, can no longer afford their home. The decision to sell your home under these circumstances is difficult. In addition, the fluctuation in real estate markets can leave you in a situation where you have little or no equity. If this is the situation, loan modification might be able to assist in the sale of your home.
- DEED IN LIEU OF FORECLOSURE: If you can no longer afford your home and you do not want to proceed with the marketing efforts or foreclosure, you can voluntarily return the property to the investor.
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How do I receive assistance?
Contact Us and consult with a Loan Modification Specialist about home retention and the best possible solution for your specific situation.
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How do I qualify for a Short Sale?
As a borrower, you must prove that a hardship exists. The lender must be willing to accept the short sale proceeds as full settlement of the debt.
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Can any Real Estate Agent assist me in selling my home in a short sale situation?
Sometimes, but usually you have only one attempt available to succeed in a short sale transaction. It is highly recommended that you work with a company that is experienced in short sale and is a specialist in this field.
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How do I find a proper broker/agent?
The Loan Modification process will introduce you to a network of qualified Real Estate Agents nationwide that can be assigned to you for assistance. The agents work under strict guidelines.
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Does my mortgage company want to foreclose on my property and take my house?
No, they do not. When a mortgage company forecloses on a property, they usually lose money. They lose even more if they are forced to take ownership of the property. Because of the mortgage companies as well as the investor's likely losses on foreclosed properties, there are excellent method available to either avoid going into foreclosure or to get out of it.
Unfortunately, in many situations, you are really nothing more than a loan number to your mortgage company. They simply want to ensure that they meet their numbers. While it might be encouraging to know that their financial interests lie in keeping you out of foreclosure, you should also realize that mortgage companies are some of the largest owners of real estate in the world. This is directly attributable to the number of properties they assume after foreclosure sales.
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Is it too late to save my home if I am currently in foreclosure?
Unless the bank has already taken the house back, it is not too late. The Loan Modification process can help you to keep your home.
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Can I do this myself? Why should I pay someone else to do it for me?
It is possible to negotiate with your mortgage company yourself. Some people act as their own accountants or lawyers, too. Still others are knowledgeable about mortgage delinquency and feel comfortable negotiating with their mortgage company.
However, for others phrases like "partial claim", "loan modification" and "special forbearance" are intimidating and confusing terms. Most people find dealing with their mortgage company to be a humiliating experience, since they are shuffled along in an assembly line-like process, never sure if the representative they are talking to is really looking out for their best interests.
When you are on the phone with your mortgage company and they tell you there is nothing that can be done for you, how do you know if this is the truth or if it is simply what the representative chooses to tell you as a result of their inexperience or apathy? These representatives aren't sitting in an office of their own, thinking about what a great career they have. The mortgage company representatives you will deal with work in call centers- a low-paying, high-turnover field of employment. Loan Modification negotiators have more experience in mortgage retention than most any of these representatives.
How many financial transactions are as important to the average person as their home? Having the informed and proper guidance and representation can make all the difference in the world. It can save you time, trouble, money and your home.
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