The loan modification process follows definite guidelines and the goal is to reduce the monthly payment to the amount the borrower can afford and this is called the Waterfall Method.
This is commonly called HAMP which is the home affordable modification program and it is used to assess your financial status and if you qualify for this loan modification service and engaging a loan modification consultant will be able to advise you how to go about the process.
- The homeowner applies for assistance.
- The borrower provides all the necessary information such as total income and expenses
- It is then reviewed by the lender
- The Waterfall Method is tested and established if the person is acceptable
- If the modification is possible then the borrower could be approved
- After that there is a three month trial period before it is made permanent.
When an application is admitted the Waterfall Method will take all the following criteria into consideration:
- Monthly income
- Monthly expenses
- Cash or savings in the bank
- Other information that might be required to determine whether the person is fristly eligible and secondly whether they can afford to honour the new payments.
The first aspect that the lender will take into consideration is if the interest rate can be lowered and a loan modification lawyer will help you negotiate this because it can be lowered to as low as 2%.
If this does not meet the right criteria then the lender will consider extending the loan period to reduce the monthly payments which in turn will also reduce the monthly payments.
The last loan modification option that will be considered is to lower the principal amount being forgiven and this is called the Waterfall Method because the lender needs to follow these steps to establish if you qualify.
Using a loan modification company like Loan Modification Depot would help on how the necessary information pertaining to your financial status should be presented.
The repayments should be approximately 31% of the monthly income and if it is too low or too high the applicant could be denied.