What exactly is a loan modification?
Loan Modification is the process of modifying or re-writing the terms of your existing loan so that you have a payment you can afford. This way, you do not have to move out, sell your home or have the bank take it back.
Typically this will be an interest only payment until you can afford to pay more. Loan modification program will run from now until December 31, 2012 (loans can only be modified once).
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Why should I get a Loan Modification?
There are many solutions available to homeowners falling behind on their payments. Most people think Bankruptcy in the only option, short of just letting the Bank take the home. There are many consequences to either action. While “Short Sales” are becoming more common, it still requires that you leave the home. Many Lenders have workout options available, but want you to “catch up” all the missed payments. Obviously this is nearly impossible for most people. There is one option that will allow you to keep your home, reduce your payments, and potentially reduce the principal balance due on your home. Loan Modification is a HUD approved workout solution becoming more common during this foreclosure crisis.
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What happens during a Loan Modification?
During a loan modification the terms of your mortgage are renegotiated to bring the interest rate down to a percentage that fits into your budget and the monthly payment no longer presents a severe strain on your ability to meet your other financial obligations.
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What are the benefits of Loan Modification and Making Home Affordable Refinance?
- No Credit Check
- No Appraisal
- Reduce your principal
- Reduce your interest rate
- Erase back payments
- Stay in your home
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- Protect your equity
- Stop creditor calls
- Avoid bankruptcy
- Free Consultation
- No Obligation
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What exactly is a Making Home Affordable Refinance?
A Home Affordable Refinance will help borrowers whose loans are held by Fannie Mae or Freddie Mac refinance into a more affordable mortgage. If you are a homeowner who is current on your mortgage payments but unable to refinance to a lower interest rate because your home value has decreased, you may be able to refinance. The Home Affordable Refinance program ends in June 2010.
What is needed from me to get the process started?
Documents relating to your financial situation, income, and mortgage details help legal professionals to draft the papers your lender requires for a need based loan modification approval. Upon receipt, the terms of the mortgage are renegotiated to reflect a lower monthly payment. Best of all, the paperwork is handled in its entirety by the professionals in charge of negotiating the deal and you are not required to attend a closing or any such meeting.
How long is the Loan Modification and Making Home Affordable Refinance process?
In most cases it takes 60 to 90 days. However, 120 days is common with lenders like who are backed up like Washington Mutual, Countrywide, etc. The trend lately has been much quicker with negotiated terms and modifications in 30-45 days. It is important to remember that each modification and refinance is unique and the time varies based on who your mortgage lender is and what your hardship details consist of.
Will I have to pay all of the late fees and penalties?
Most lenders will either waive the late fees, and in some cases, allow you to include any outstanding amounts into the new loan. Always ask for a complete breakdown and description of all fees and penalties from your lender-some fees may not be justified and should be waived.
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Will my bank need to do a physical inspection of my home and view the inside?
Yes, the lender may conduct a review if they deem it necessary during the loan modification process.
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How can I find out if I qualify for a loan modification?
Your lender will look for to approve your loan modification if proof of your ability to afford the new loan payment now and in the future. You will need to provide your bank financial statements and usually proof of your income, such as pay check stubs, bank statements, etc.
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Can I still ask for a loan modification even if I am not currently delinquent on my home loan?
Yes, most lenders will now accept loan modification applications from homeowners who foresee a problem meeting their home loan payments. The Federal government is urging lenders to proactively reach out to homeowners who face potential default. The Loan modification process allows homeowners to apply for a loan modification without being currently delinquent.
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What is an acceptable hardship situation?
Each home owner's situation is unique, generally lenders consider: divorce/separation, death of a spouse or borrower, illness/medical bills, military service, loss of job/income to be acceptable reasons to consider a loan modification. A well written, compelling hardship letter included in your loan modification application package is very important so your lender will understand your current circumstances and intentions.
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What are "hardships" and do I qualify?
Here is an example list of hardships that lenders consider during the loan workout process:
- Adjustable Rate Mortgage Reset- Payment Shock
- Illness
- Loss of Job
- Reduced Income
- Failed Business
- Job Relocation
- Death of Spouse or Co-Borrower
- Divorce
- Marital Separation
- Military Duty
- Medical Bills
- Damage to Property (natural disaster or unnatural)
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What about my missed payments-can they be added back into my loan?
Yes, generally your missed payments can be added to the new loan balance and then spread out over the term so you can then afford the new loan payment.
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Is there a fee to do a loan modification and can I do it myself?
Our company charges a fee for gathering, reviewing, transmitting and communicating the needed information; we work closely with your lender in obtaining and processing your loan modification or affordable refinance. You can work with your lender directly with no fee but our services our designed to streamline and take the confusion and complications of the process away from you. There is no title, escrow or appraisal.
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Are My Creditors going to continue to call me?
One of the first steps with our loan modifications is to contact and notify your servicing lender that we are representing you and demand they cease harassing you. It often takes up to thirty days for your lending company to acknowledge our settlement or loan modification requests.
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What if my mortgage company won't approve us for a loan modification?
Now more than ever, mortgage companies and banks understand that if they do not provide revised loan terms or settle for a portion of the debt to be paid that they will more likely than not get any money. Banking institutions are aware of the declining housing market. They know that at a certain point, they have to take what they can get. Most of them will settle very quickly, avoiding the cost of foreclosure and recovery actions. In the rare event that a creditor won't settle with our offer, they will return with a counter offer that will be favorable to you. There are many options to prevent foreclosure if you act soon enough.
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Foreclosure Timeline
As borrowers fall behind in their payments, they can expect lenders to react in specific ways at specific times. Here's a look at the timeline from late payment to foreclosure.
DAY 1 |
It's the first of the month, and the mortgage payment is due. The borrower misses the payment. |
DAY 16-30 |
A late charge is assessed. The company that processes the borrower's payments (called the mortgage servicer) begins to attempt to make contact with the borrower to find out why the payment is late. File is sent to the Collection Department. |
DAY 45-60 |
The servicer sends a "demand" or "breach" letter to the borrower pointing out that terms of the mortgage have been violated. The borrower is given 30 days to resolve the situation by paying the delinquent amount. |
DAY 90
Notice of Default |
Foreclosure proceedings start with a Notice of Default (NOD). The document is recorded at the request of the lender by the trustee and is recorded in the county in which the property is located. The recording of Notice of Default gives "Constructive Notice" to the public.
After the recording of the Notice of Default, the borrower and junior lien holders are given proper notification and the borrower has 90 days to bring their account current. This period is referred to as the Reinstatement Period. |
DAY 180
Notice of Trustee Sale |
If the borrower does not reinstate their account within the 90 day period, the lender will authorize and instruct the Trustee to record the Notice of Trustee Sale (NOS). |
DAY 201 |
After 21 days of the recording of the NOS, a foreclosure sale can take place at public auction. The property may be sold to a third party bidder or revert back to the lender for a specified amount. |
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Why should you choose our brokerage firm and agents to work for you?
We have a dedicated team that is very sincere and passionate in what we do. Whether you are looking to buy/sell a home, finance/refinance a mortgage, or to reduce you mortgage payment and save your home with Affordable Refinance and Loan Modification, we have experienced agents to assist you with it. Furthermore, we have n in-house attorney that is currently assisting clients to retain their homes. He is a s killed advocate, negotiator, and corporate law specialist with years of experience in the Silicon Valley. Much like in any important matter, having the proper guidance and representation can make all the difference in the world. It can save you time, trouble and money.
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