Frequently Asked Questions

What exactly is a loan modification?

A loan modification is a permanent change in one or more terms of a borrower’s home loan and allows the loan to be reinstated. The purpose of a modification is to ultimately and significantly lower monthly payments, and results in a payment the homeowner can afford.

Can the lender include any other costs? Appraisal, credit report, title, closing costs, broker fees, etc…

There are usually no costs assigned with a Loan Modification. The banks are modifying loans for no charge.

Per HUD, the accrued late charges should also be waived by the lender at the time of the loan workout-this varies depending on the type of loan-but always request a complete breakdown and description of all fees and penalties from your lender

Can the bank require an interior inspection of the property if they have concerns about the property condition?

Yes, the lender may conduct any review it deems necessary to verify that the property does not have physical conditions which might adversely impact the value.

Who qualifies for a loan modification?

Anyone that is having trouble paying their existing loan is a candidate for loan modification. In today’s housing conditions banks are willing to work with mortgage holders that are having trouble paying their mortgage. However, high probability candidates are homeowners currently in an adjustable rate mortgage, have a high interest rate, are upside down on their home, and/or experiencing any kind of hardship.

The number 1 factor in your your approval by your lender is your ability to make the new modified payment now and in the future. You need to supply the lender with proof of your income, along with a complete and accurate financial statement detailing your income and expenses to show them that if granted the modification, you will be able to afford the new, lower payment.

Do I have to be currently delinquent on my payments to get a loan modification?

Most lenders are now accepting applications from homeowners who are not currently delinquent, but who are able to prove to their bank that due to imminent interest rate increases, they will no longer be able to afford the loan payment under the terms of their loan. It is advisable to contact your lender as soon as possible to start the loan modification process, regardless of if you are delinquent or not.

What is an acceptable Hardship situation?

Each homeowner has a unique set of circumstances that caused them to fall behind on their home loan, but generally the lenders consider divorce/separation, loss of income, death of spouse, co borrower or family member, illness, job relocation, military service to be acceptable reasons to consider a loan modification. A compelling hardship letter included in your application is a very important part of a successful application.

Will a loan modification help me stop foreclosure?

Yes, that is the goal-by working with your lender to find a loan workout solution, your loan is brought current and the foreclosure process is halted.

Can my missed payments be added back into my new loan modification?

Yes, the arrears can be added to the new loan balance and spread out over the term to allow the loan to be brought current.

Can I do a loan modification myself or should I pay someone to represent me?

In my opinion, paying thousands to a company to do a modification for you is a waste of money! If you follow my guidelines, you will be able to accomplish this in no time.

A Loan Modification firm will charge you a high fee ($2000-$5000) to submit the docs that you can submit yourself. Banks are willing to help their clients with a Loan Modification with out an Attorney. What is important, is you have the CORRECT, BANK APPROVED documents ready for submission, so the bank can efficiently and more effectively review your case.

But I suppose that it is entirely up to you and your comfort level with dealing with your lender. And you must also consider your current financial situation.

Regardless of what you decide, the first thing you should do is learn all you can about the process, your legal rights, and what it takes to get your application approved.

So how do I get started to modify my loan?

Before contacting your bank’s loss mitigation department or a loan mod company, do your homework-learn as much as you can about the loan modification process so you can make informed decisions. Study the kit, and make the call to your lender.

Why will it work for me?

The government has asked for ALL lending banks to help in the foreclosure epidemic and modify mortgages for all troubled homeowners. Certain websites can automatically produce your Bank Approved Loan Modification Package. Going to your lender with a complete modification package, will make a scary process seem simple.

What if my credit is bad?

A Loan Modification is not based on credit. The banks are trying to make a good loan out of a troubled loan.

What if I have no equity or I am upside down on my home?

It does not matter! Some banks are doing principal reduction, which means the bank will discount the total loan amount to the current value of your home. This is called a principal reduction and is becoming popular for banks.

What if my income is too low?

You will need to show the bank, you or all others in your household can afford the new payment proposed by your bank.

What should I expect the terms to be on my new loan?

Banks have rapidly changing guidelines for Loan Modifications. A bank will typically modify your loan into a loan you can afford and continue to pay. This may include a lower interest rate, payment reschedule, principal reduction, longer terms or any other function that will make and keep the loan performing.

How much can I really save by doing a loan modification?

Hundreds or Thousands a month. Remember, a Loan is typically for 30 years. So the Loan Modification that saves you $500 a month, really equals $150,000 over the life of the loan.

Does every bank do loan modifications?

Yes. We are in a housing crisis and banks are willing to work with clients to help save their homes.

How does the bail out bill affect my chances of getting a loan modification?

The government is telling banks they need to do their part to fix the housing crisis. The Bail Out Bill will only help your chances of getting a Loan Modification.

What should I do to ensure the best loan modification?

Read as much information from all sources that you can find. Then when you are ready to contact your lender, follow our step-by-step guide.

How long does the process take?

With the right documents you will be able to submit a full package ready to go to the bank. All Banks are different and can take 30-90 days for a decision. It all depends how busy they are with current modification requests and how many loss mitigators they have on staff. It is not uncommon for one loss mitigator to have up to 700 files under their management at a time.

Need More Help?

Get Free Information Today To Answer The Following Questions:

1. What Is A Loan Modification?

2. Do I Qualify For A Loan Modification?

3. What Are The 4 Steps To A Loan Modification?

4. Can I Really Do This Myself, Or Should I Hire A Company?

5. How Will The ‘New’ Obama Plans Affect Me?

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