The number of homeowners who are facing the prospect of a foreclosure is rising at alarming rates each day. There are only three solutions for a person who finds it increasing taxing to make his monthly mortgage payments due to financial issues or a person who has missed a payment: home loan modification, refinancing and foreclosure. If one were to rule out the third option; mortgage modification stands out as the most feasible option. So let us analyze the pros and cons of getting your loan modified and how it can help you.
The Pros:
Banks are more willing to grant modification instead of opting for foreclosure simply because there are no buyers in the market.
Since mortgage modifications are designed to help home owners in financial trouble, the lending institution already knows about these issues and so the credit score of a home owner is not a constraint in the process of procuring a home loan modification.
If you are facing financial distress, your monthly mortgage payment can be brought down to an affordable figure through mortgage modification
Opting for a home loan modification does not have an adverse effect on your credit score. On the contrary your credit score will show that you are a trustworthy borrower.
Even though you will need to put in some amount of paper work to get your loan modified is it is not half as much as paperwork needed for refinancing because a home loan modification is not a new loan like refinancing
You can successfully change your adjustable rate mortgage to a low fixed interest rate with the help of mortgage modification.
Cons:
You will have to follow the lender guidelines diligently for your home loan modification application to be accepted.
You will only get one chance to apply for a mortgage modification. So it is imperative to get all the paperwork done correctly.
It takes longer, up to 180 days for a modification to be granted as opposed to the 30 to 60 days required for refinancing.
So all in all the prose of a mortgage modification far outweighs its cons and it is certainly a solution that should be considered if you are facing a foreclosure.
If you are considering mortgage modification, you should really look into 60 minute home loan modification. It is a great resource that contains a lot of important information about the process of applying for a mortgage modification. It was created by a loan modification expert who has modified numerous home loans. The kit included a professional hardship letter outline, and one on one support in case you have any questions. It is a must have for homeowners. To learn more about 60 minute loan modification click here!
Loan Modification FAQ:
Question: My home value has decreased is there a loan modification to adjust my payments to reflect market value?
I have found loan modification that will lower my interest rate, but I’d like the amount of my loan lowered or forgiven. If there are program that does this?
Answer: The make home affordable program is only for those that are delinquent in their payments. If you pay on time and are not behind in your payments then there is no help for you. To re-finance, what you owe must be 80% or less of the home’s value. So if you owe more than the home’s current value you have to wait until value’s improve. I talked to my lender and they could do nothing for me since I make my payments each month. If I stopped making payments then they could modify the loan but it would also be a bad mark on my credit record. One thing I learned that people who are in adjustable rate loans could get a much lower interest rate if the adjustable adjusted right now. Rates are low so lenders are making profit off loans that are locked into an adjustable rate. Right now loans should adjust down unless they are really badly structured loans.
Question: How do I qualify for a home loan modification?
I have a first and second mortgage that is more than the appraised value of my condo. I tried to refinance and now am asking the mortgage company for a loan modification. What is the criteria needed to receive a loan modification?
Answer: Having a both a 1st and a 2nd certainly complicates the situation, especially if the 1st and the 2nd are two different lenders.
I would speak to a law firm that specializes in loan modifications. There are many companies that claim they can help you with a loan modification, but the vast majority of these places are hucksters. If you use an attorney they have to answer to a state bar association if they screw up or mislead you.
You will probably have to show that you are not able to make the two payments on your loans without the modification. Lenders just don’t lower your payment just because the value has gone down. You must be able to prove your hardship. Normally, you have to show that you have lost income or you can’t afford to pay the increased payment due to an interest rate rise on your loan(s).
Question: Will our lender start foreclosure if we are in the midst of trying to obtain loan modification?
We can no longer make the mortgage payment and called Wells Fargo who is mailing a loan modification pkg. to us. Meantime, we will not be able to make the payment. We do not want to face foreclosure. Will Wells Fargo begin foreclosure if we are making a concerted effort to get a loan modification with them? This is very troublesome to us. we want Wells Fargo to work with us, but what happens if they refuse us? Do we have other options or will they offer other options to us?
Answer: Truly, only Wells Fargo can answer this question. Part of the problem with the big banks is that none of their departments talk to each other. Even though you are trying for a loan mod, the department that initiates foreclosures won’t know that and will likely move forward if it’s reached that point. The most important thing you can do at this point is constant communication with them. Call them and let them know you can’t make the payment and you are working on a loan mod, have them note your file in the computer system. This may or may not help. When they call you or send you letter, DO NOT ignore them. Always take their calls and respond to their correspondence, even if it’s just to tell them you don’t have the money and remind them of your loan mod application. Keeping constant touch with them will help.
How far behind are you now? Is this the first payment your are missing? If it’s the first payment, I wouldn’t worry too much about foreclosure proceedings yet, but if you are greater than 90 days behind, then you should definitely be more aggressive with your contact.
Question: How long does it take to get qualified for a loan modification?
Its been two months and they keep telling us its in process. We dont know if we have to move out or not we are two months behind. Any suggestions? Will they foreclose while we are waiting? The Co. is ASC.
Answer: I am sure it must be torture just waiting. But there is no set timeframe. In fact, every lender and every situation is different. You are fortunate your lender is even looking at you for a modification given you are only 2 months behind in payments. Some modifications take several months. Lenders have a ton of modification requests and not enough trained staff and time to handle them all in a quick fashion – so they say.
I presume you have provided the lender with all the requested paperwork? If so, all you can do is wait. But keep calling them as you have already done.
Generally, the lender will not foreclose while a modification is pending. But save your money while this is going on. Do not assume your modification will be approved.
Moving out will not happen overnight. If the lender does opt to foreclose, you will receive very official notification in the mail – regular and certified. And you will be presented with final options.
Question: What website offers a free DIY Mortgage Loan Modification Kit?
Answer: Your lender will do this for you.
Question: Do I have to be behind on my mortgage payments to get a loan modification?
Answer: If you are current on your mortgage, it is harder to get a mortgage loan modification.
However, each modification is look at by an underwriter. If the underwriter feel the borrower can paid the mortgage then they make grant you a modification. Keep in mind the lost of major income can be a big factor if your not currently behind on your payments.
Question: Loan Modification Trial Period?
I am trying to get a loan modification from WaMu (now Chase). They put me on a trial period for 5 months (only supposed to be 3 months), but now they are putting me on a second trial period for 3 more months, but significantly raised the payment price… what is Chase trying to do?
Answer: Chase is obviously looking after their own best interests. You need to get any promises they make IN WRITING, and carefully document all phone conversations with them (dates, times, names, details of discussion). Also, you might want to consider having a loan modification specialist negotiate on your behalf. If so, check them out with the Better Business Bureau before you sign an agreement.
Question: Can someone get a loan modification if a their spouse passed away?
I know someone in this situation. The husband, who brought in the majority of the income, passed away. I know people are getting their loans modified before they are even late. Does anyone know of a special program or legal type of thing that they can do to get this done?
Answer: Probably yes but the bad news is not everyone can qualify for a mortgage loan modification. Loan modifications are designed to help homeowners who can still afford to pay a slightly modified mortgage. It is not supposed resolve all troubled mortgages.
Basically there are 5 requirements to qualify for a loan modification. They are:
1. The home needs to be the homeowner’s primary residence;
2. The mortgage must be less than $729,750;
3. The homeowner is having trouble making their existing mortgage payment;
4. The mortgage was established before January 1, 2009; and
5. The homeowner payment on their first mortgage (including principal, interest, taxes, insurance and homeowner’s association dues) is more than 31% of their current gross income.
Homeowners don’t need to pay a company to obtain a loan modification. However, sometimes it can be better to have someone, such as a lawyer or credit counselor, negotiate on your behalf. A good strategy is to talk to as many experts as you can prior to contacting your bank. Many of these services will give you a free consultation.