Should you contact your lender about an application for a loan modification or should you wait for them to approach you? In either case, what information should you have? These are some of the concerns that any competent loan modification company, such as loanmoddepot.com, addresses on a daily basis.
As a borrower, you should realize that the main business that your lender has with you concerns their debt. If you are facing financial challenges and have become delinquent, it’s in your best interest to do all the things possible for your lender to have trust in you and your payment capabilities.
Should You Approach Your Lender For a Loan Modification Or Should They Approach You?
It’s wise for a delinquent mortgage loan borrower to approach a loan modification specialist and get advice on the steps to take to avoid a foreclosure. The specialists at loanmoddeppot.com can assist you in coming up with a strategy for payment in order for you to retain your home. In some cases, the lender will approach a delinquent borrower and offer a loan modification option. Interestingly, in most of these cases, the borrower will only need a short-term solution, since they expect to be out of their financial crisis after a while.
Talk with a Loan Modification Expert
There are lots of options for a loan modification and unless you understand the different choices, you may be cornered into one that is not suitable in the long run. It’s necessary to talk to a loan modification expert who will offer you the right guidance on loan modification types and procedures. You will also need to avail certain important information and documents that will determine if you will qualify for a loan modification. The loan modification specialists at loanmoddepot.com can help you gather the key elements necessary in determining your eligibility in this regard.
Falling Behind on Mortgage Loan Payments?
The decision to foreclose a home takes time and is only used as the last resort if all other methods fail. As a homeowner, it is important to understand the requirements and conditions of your mortgage plan so that you can stop a looming foreclosure.
How to Stop a Foreclosure?
There are several ways in which you can stop a foreclosure or buy yourself some time before it is implemented.
- Get Up-to-Date – resume mortgage payments and get back on track with your loan; after all, this is what the bank is a looking for.
- Forbearance – if you are unable to get the loan back on track immediately, visit your lender and discuss the possibility of revising the terms of your loan within a 3-to 12-month grace period before resumption.
- Refinancing – secure a new home loan from a new lender or the same lender to pay off your existing mortgage in full. This will automatically release you from a foreclosure.
- Loan Modification – negotiate a favorable loan modification option with a certified loan modification expert to reduce your financial obligation and make payment of the loan amounts much easier.
- Quick Cash Sale – sell off the house to a willing cash buyer and pay off the full mortgage before the property is foreclosed. This will not only save your credit rating but will also leave you with some extra money to spare.
- Negotiate a Short Sale – negotiate with your financier the possibility of selling the home to a buyer willing to pay less than what you owe. This type of sale releases the property from a foreclosure immediately.
- File for bankruptcy – bankruptcy temporarily stops the potential debtors from demanding payment from you. Although this is not a permanent solution to a foreclosure, the court might order a new repayment plan for you so as to clear the outstanding mortgage balance; thus avoiding the foreclosure.
A loan modification is usually the last and perhaps the best hope for millions of Americans at risk of losing their homes due to defaulting on their loan payments. A loan modification is restructuring an existing mortgage in order to escape a possible foreclosure.
Typically, loan modifications comprise two main things; lowering an inflated variable interest rate and lengthening the life of a mortgage, thus reducing monthly payments. Loan modification restoration has become a norm today due to the increased interest rates on various mortgage loans. In most cases, the mortgage company will not be the one recommending a modification but the homeowner making an application to evade the foreclosure.
How to Apply for a Loan Modification?
Typically, you are expected to write a formal mortgage modification hardship letter to your mortgage company. The company is not legally mandated to reconstruct mortgages, so you should not expect them to approve your request automatically. Many of the lenders will actually give you a difficult time getting your request approved and you may even be forced to seek help from a loan modification attorney or company.
You have the highest chance of getting your loan modification request approved if you work with a reputable agency, like loanmoddepot.com. This agency has professionals and experts who are experienced in negotiating with lending institutions.
What Happens After a Loan Modification Request Is Approved?
A bank or lender will be more willing to agree to the terms of a loan modification restoration that have been arranged by an expert. If the lender denies the request, you will be informed by the agency and given the reasons as to why. If the loan modification request has been approved, the new terms will be processed through the loan servicing department. The amortization of the loan is mostly not done during the loan modification. Although the adjustment will take some time to be enforced and the bank may even accept a suspension of payment until the mortgage loan modification is in effect, the homeowner is expected to resume normal payment and repay all debts inclusive of interests.
What are Mortgage Grants?
As a homeowner, you may go through difficult times caused by loss of income due to a variety of reasons. When this happens, it will become difficult for you to meet your monthly mortgage obligations. However, there are home loan modification mitigations available to help the homeowners prevent the loss of their homes through a foreclosure. These programs may reduce the principal or interest or suspend the mortgage payments all together. On the other hand, a mortgage grant is, in essence, ‘free money’ made available to the homeowner to offset mortgage payments. These mortgage grants are more elusive when compared to home loan modification options.
Some Grants to Consider
There are a variety of mortgage grants available for homeowners to consider, including:
- Veterans Affairs Housing Grants – this grant is only open to homeowners currently in the service or veterans who retired from the service due to injuries incurred while at work. Offering up to US$77,307 per grant, these funds can be used to modify a home, buy a new home or offset mortgage principal balances.
- Keep Your Home California – this grant is specifically designed for unemployed homeowners in the low to moderate income communities who receive unemployment benefits from the state. Beneficiaries of this grant can get up to US$36,000 annually to buffer their mortgage payments.
- State Housing Initiative Partnership (SHIP) – this government-funded program is open to low and moderate income communities, and was created to make home ownership easier and more affordable. These funds can be used to pay off mortgage loan deposits or clear outstanding mortgage loan balances.
There are several other grants and low interest loans provided by different government agencies and NGOs spread across the country. Before considering consulting a home loan modification expert, visit your local Housing and Development Office to get more information.
Fixed Term Home Loan Modifications
When facing a difficult financial period, it might be hard for you to make your monthly mortgage payments on time. In such a situation, fixed term home loan modifications can be the right solution. This facility, also known as mortgage loan modification, requires the homeowner, in conjunction with the lender, to realign the mortgage loan terms with the homeowner’s current financial status.
How to Go About It?
A mortgage loan modification usually comes with a set of basic rules and guidelines that the homeowner has to meet in order to qualify for assistance. Some of these terms include loan modification testing, which evaluates how eligible a homeowner is for a loan modification service. This test will guide the lender in knowing which option might be the best for them. However, a negative result will mean that the homeowner does not qualify for the facility; so a foreclosure would be most profitable for the lender.
Another important aspect of negotiation is giving the proof of sufficient income to service the revised loan. Homeowners will have to show proof of their current financial hardship and their source of income. Similarly, a loan modification inspection of the property will be required to establish the value and saleability of the home. This is necessary so that the lender can accurately negotiate new rates and ensure that the house can be resold at a good price in the event of a foreclosure.
Since the law dictates that 31% of a homeowner’s income should be directed to repaying the home loan, a professional loan modification expert should be engaged to help the homeowner make the correct declarations. If a homeowner’s income is unable to meet the 31% threshold, then further negotiation on payment reduction over a specific period of time should be considered. This period and amount can be amended in case the homeowner’s financial situation changes.
Home Loan Modifications
A home is an important element for the health and survival of a family. When a home is foreclosed, the family has to face the harsh reality that their home would be taken away from them. However, home loan modifications play an important role in helping homeowners save their homes before it’s too late.
Why a Loan Modification Will Keep You Afloat
By securing a loan modification facility, you will not only save your home but also get a variety of loan modification options, including reduced interest rates, reduced monthly repayment fees and a longer repayment period. These revised conditions of your loan will reduce the stress and frustration that come with an impending foreclosure.
The process of a foreclosure is quite tedious, lengthy and expensive; so, many homeowners do not wish to take part in this process. Instead of investing your time, energy, effort and money in a lawyer to avoid a foreclosure, it might be easier to get loan modification help from a qualified loan modification consultant to ensure that your home stays afloat.
Research shows that loan modification costs are much lower than other pre-foreclosure remedies, like a deed-in-lieu or a short sale. Being a government instituted program, the application process has been simplified and made easy to use. Homeowners pursuing loan modification mitigation can avoid the emotional trauma, time and money they would otherwise have to spend on a short sale or a deed-in-lieu of foreclosure.
Keeping a home, which is under the water, afloat can be a grueling process that might be both emotionally and financially draining. However, availing a loan modification service is the only sure way of keeping your home above the current of foreclosure.
Home Loan Modification Hardship Assistance
Hardship assistance is a service that is made available to the homeowners facing difficulties in meeting their monthly mortgage obligations. Following the passing of the 2008 Making Home Affordable bill by the US government, the Home Affordable Modification Program (HAMP) has made hardship assistance easier and more efficient for the troubled homeowners.
The Dos and Don’ts
Before embarking on securing a home loan modification, it is important for you to weigh the available options. Investigate if there are other avenues that you can pursue to save your home before signing up for a home loan modification.
Timeliness is the key when considering home loan modification assistance. It is advisable to consider this option early enough before your financial situation is handicapped. This will go a long way in helping you secure the ownership of your home.
Carry out proper research on the available home loan modification companies on the market to ensure that you select the right provider. Invest in a loan modification specialist or a loan modification expert to guide you in knowing what to expect from different providers.
The process of securing a home loan modification hardship assistance is riddled with a lot of financial and legal technicalities. This might be a hindrance for individuals with little or no knowledge of finance and law. It is advisable to consult a home loan modification attorney who has a good grip of the process to guide you through it.
Upon making the decision to pursue home loan modification and selecting the loan modification company, draft a hardship letter together with your loan modification lawyer stipulating:
- Your reasons for financial problems
- Your proposed payment plan, and
- Any special requests or leniency
This letter should be submitted to your preferred service provider and should make the process of securing a home loan modification much easier and faster.
Surviving A Foreclosure
A foreclosure occurs when a homeowner is no longer able to meet their mortgage obligations in a timely manner. After a prolonged period of default, the financier will be forced to foreclose the property so as to earn back whatever they can from its consequential sale. There are several methods through which homeowners can avoid facing a foreclosure, including seeking loan modification services, declaring bankruptcy, securing a short sale or negotiating a forbearance.
In the event a homeowner is completely unable to make monthly mortgage payments, the lending facility may extend a forbearance to them. A forbearance is simply an extension or moratorium extended to the homeowner to suspend monthly payments for a specific period of time until they are able to resume to their regular payments. Although it is not mandatory for the financier to offer and the homeowner to accept such an agreement, a forbearance is a stop-gap measure that gives the homeowner enough time to find new sources of income or alternative employment options.
A forbearance endeavors to reduce any possibility of facing of a foreclosure and ensure families do not lose their homes without a fighting chance. Unlike the loan modification options, a forbearance will provide the homeowner with a 3 to 12 month grace period before monthly contributions can resume as normal. A financial audit of the homeowner will be implemented to make sure they will be able to resume regular payments once the grace period lapses.
Upon initiation of a forbearance, a loss mitigator will be assigned to the homeowner to act as a liaison between them and the financier. The key roles of the loss mitigator will be to keep both parties abreast on financial information, clarify any issues in the proposed repayment structure and make necessary recommendations to the financier. This newly acquired relationship is intended to make the transition for both parties smooth and clear.
Do You Need A Loan Modification?
Circumstances in life may cause you to face the threat of a foreclosure. A foreclosure, if unstopped, will lead to you losing your precious home. There are several remedies that you can apply to stop or delay an impending foreclosure, including declaring bankruptcy, conducting a short sale or seeking loan modification help. A loan modification mitigation is the only sure way of saving your home from a foreclosure, so do you really need it?
What You Need to Know Before Applying for a Loan Modification
The HAMP guidelines stipulate who is eligible for a loan modification service and under what circumstances one can qualify for it. Homeowners considering this process should carry out due diligence on the various loan modification companies to understand how the different processes, fees and time compare. Some agencies might be too rigid or even take too long to process your application, so it is best to make your decision an informed one.
There is a standard list of requirements indicated on the HAMP website for homeowners wishing to apply for a loan modification. Some loan modification inspectors, however, may require more information than what has been listed. Prepare a detailed checklist with the help of a loan modification specialist and ensure that all the listed requirements are on hand. Some of the must-have documents are your hardship assistance letter, loan payment documentation, proof of financial hardship, proof of income and your IRS form 4506-T.
Loan modification is riddled with lots of financial and legal jargon which, in some cases, might cause the homeowner to miss out on some important parts of information. Make sure to query everything that is unclear. A loan modification attorney is qualified enough to understand and respond to all the related queries, so do not hesitate to make sure everything is well understood.
Foreclosure, How Did I Get Here?
As a homeowner, if you become incapacitated due to an illness or an accident or losing your job or getting a divorce and now you can no longer commit to making your monthly mortgage payments, your home may be foreclosed. At this point, you will be faced with either losing your house to the bank or selling it cheap to an willing buyer.
Selling Your Home Pre-Foreclosure
An impending foreclosure means that you may potentially lose your home to the bank. Homeowners serviced with a Notice of Default (NOD) from their financiers have 30 to 120 days to remedy the situation before the home is officially foreclosed. During this ‘grace period’, homeowners can consult with a home loan modification expert to find out if they can qualify for hardship assistance from the government or local loan modification companies.
Consult a real estate agent expert in pre-foreclosed homes to advice you on the best options to pursue in terms of pricing, customer sourcing and closing the sale. Such pre-foreclosure sales are mainly done on a cash-only basis; therefore, it is important to know who your target clientele is beforehand.
Alternatively, homeowners can discuss and agree with their respective banks on a short sale process. This will allow the bank to postpone the foreclosure date, as you will try to secure a willing buyer. A short sale can be carried out by a real estate agent since they have a wider pool of buyers.
To get more time to sell your pre-foreclosed home, secure a short term loan and make your defaulted mortgage payments; as you look for a buyer for the home. But be informed that such short term loans may be very expensive.