Loan Modification FAQ
- "Do it Yourself Kit."
What is Loan Modification?
Loan Modification- This term has been getting a lot
of attention lately and rightfully so. With millions
of homeowners stuck in toxic adjustable rate mortgages
and no ways to refinance out of them, loan modifications
may be the only way to assist struggling borrowers.
This term is used when your lender modifies your current
mortgage (same loan you have, only changes are made
to the note) in order to work with you and make your
mortgage more affordable. A modification to your rate,
balance of loan, delinquent fees owed, term of loan
etc. can be made by the Lender. In the past this was
only used when a borrower was delinquent but now we
will see it being used before someone is delinquent.
This will be the hottest term and the best way to
help people avoid foreclosure.
* A Loan Modification will change the existing mortgage
note and give the client a fresh new start in managing
their home. Accounts will be brought up to date immediately.
* With a loan "modification" you take the
mortgage you now have and change the interest rate
and payment requirements in order to achieve 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. In contrast, if you "refinance"
a loan you'll be required to have a closing and forced
to pay a variety of fees and taxes.
* Lenders are willing to negotiate when borrowers
are facing financial difficulties and can't obtain
other financing alternatives. My Mortgage Modify,
Inc. shows the lender why it would be in the lender's
best interest to agree to a workout arrangement. In
turn, the lender will reduce the loan interest rate,
reduce monthly payment amounts or change other loan
terms to allow for an affordable loan to allow the
homeowners to avoid foreclosure.
Loan Modification brings the two parties of problem
loans together to mutually agree to a workout that
creates new and better loan terms which are affordable
and realistic. The hope is that the new loan will
enable the borrower to meet their obligations. With
loan modifications detailed, personalized financial
analysis, this hope becomes a reality. Our clients
accept the loan that is affordable to them based upon
their current financial situation without the worry
of another foreclosure.
HOW DOES IT WORK?
We will review the alternatives available to allow
you to keep your home. The key to avoiding foreclosure
is you! Through open communication with our loss mitigation
specialists, we can try to help you cure your mortgage
default without foreclosure.
In general there are four options available to a
homeowner in distress:
1. MODIFICATION: In certain circumstances, an investor
may allow us to add the delinquent amount to your
loan balance or temporarily reduce the interest rate
as well as your principle amount to assist you in
curing the default and restoring your credit status.
2. FOREBEARANCE: A forbearance Plan is a repayment
agreement between you and your lender. We will review
documentation supporting your monthly income and expenses.
We will develop a plan and place a proposal in writing
providing for payment of one full monthly payment
and a portion of the delinquent amount due on your
account. The objective of the plan is to allow you
to cure your default over a period of time, reinstating
your mortgage, while allowing you to maintain your
normal monthly living expenses.
3. PRE-FORCLOSURE SALE: We frequently work with homeowners
who due to a change in employment or other life event(s),
can no longer afford their home. The decision to sell
your home under these circumstances is difficult;
in addition, fluctuation in real estate markets may
leave you in a situation where you have little or
no equity. If this is the case we may be able to assist
in the sale of your home.
4. DEED IN LIEU OF FORECLOSURE: In the event you
have decided you can no longer afford your home and
you do not want to go through the Marketing efforts
or foreclosure, you may voluntarily return the property
to the investor.
How do I qualify for a Short Sale?
A borrower must prove that a hardship exists. The
lender must be willing to accept the short sale proceeds
as full settlement of the debt.
Can any Real Estate Agent assist me in selling my
home in a short sale situation?
Possibly, but usually you have only one shot to succeed
in a short sale transaction, it is therefore highly
recommended that you work with a company experienced
in short sale negotiations that can properly represent
you and is specialized in this field.
How do I find a proper broker/agent?
We have a network of qualified Real Estate Agents
nationwide that can be assigned to you for assistance.
The agents work under our strict guidelines.
Does my mortgage company want to foreclose on my
property and take my house?
Absolutely not. When a mortgage company forecloses
on a property, they almost invariably 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 wonderful ways to either avoid
going into foreclosure or to get out of it. This is
the good news.
The bad news is that you are really nothing more
than a loan number (usually one of millions) to your
mortgage company. While not trying to insult your
mortgage company, they don't need or want to specifically
help you. They simply need to ensure that they meet
their numbers. While it may 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
sheer number of properties they assume after the foreclosure
sale.
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. We may still be able to help you
keep your home.
Can I do this myself? Why should I pay someone else
to do it for me?
Yes, you can negotiate with your mortgage company
yourself. Just as some people act as their own accountants
or lawyers. Some people are knowledgeable enough about
mortgage delinquency that they are 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 dehumanizing
experience as they are shuffled along the assembly
line-like process, never sure if the representative
they are talking to is truly looking out for their
best interests or merely trying to meet their quotas
while attempting to keep the call short.
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. Our negotiators have more experience
in mortgage retention than most any of these representatives,
do you?
How many financial transactions are as important
to the average person as their home? 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 and
ultimately, your home. |
