A home loan modification is a process in which the mortgage is modified outside of the original mortgage to new terms and agreements. The resulting mortgage usually results in lower monthly payments, but the new mortgage also commonly has longer terms and potentially higher interest. The overall effect of a loan modification is to make the monthly payments more affordable for the homeowner.
Although home loan modifications are viable solutions, many homeowners choose to pursue their own modification, which results in an unsuccessful home loan modification and the bank foreclosing on the home. On the other hand, the loan modification experts at Amerihope Alliance Legal Services are among the best and most effective in the industry at getting home loan modifications approved.
Net Present Value
Loan modification experts have the ability to maneuver your finances to calculate the loan's net present value (NPV). Lenders use the NPV to decide whether it will be more cost effective to foreclose on a home or grant the homeowner a loan modification.
The NPV is calculated by reviewing the proceeds supposed to be received from the foreclosure and auctioning of the mortgage property. These numbers will be based on the following estimates:
- current fair market price of the property
- costs to repair, foreclose, and maintain the property
- costs incurred form selling the property
- funds from net sales
In addition, loan modification experts know how to calculate the NPV of the cash flow that is expected from a loan modification. In order for a loan modification expert to do so, they must have:
- value of the property
- income information and credit report for the borrower
- rate of interest
- information about mortgage debt
The Hardship Letter
Loan modification experts will also have experience with writing excellent hardship letters. The hardship letter is the document sent to your lender outlining the reasons you have been delinquent with your mortgage payments and requesting a loan modification. Although there are many ways to write a hardship letter, loan modification experts suggest your hardship letter at least satisfies the following criteria.
- Explanation of why your situation is unique
- Explanation that the hardship is over and what you have done to prevent it from happening in the future
- Honesty in explaining the situation that caused you to default on your loan
- A hardship letter that is short, sweet, and to the point
- Express gratitude to the lender for accepting your hardship letter
- Signature and date on the letter
Industry Knowledge
Some of the top loan modification experts are actually former banking employees of the largest banks in the world. Because of their previous banking experience, they have years of industry knowledge and best practices from the point of view of the big banks. These loan modification experts are masters at navigating through the red tape and standard procedure to get to the end with stunning results. Although nothing is guaranteed, dealing with a loan modification expert is one way you can you truly get an advantage over the rest of the pool of loan modification applicants.
Experience Assembling Loan Modification Packages
As a part of the loan modification process, most lenders require you submit a loan modification package. Keep in mind that loan modification packages vary from lender to lender. However, loan modification experts have the industry knowledge to package these documents regardless of the lender. Having a complete and organized loan modification package is vital to getting your home loan modification. Most lenders state that missing documents from a loan modification package are the main reasons for modification denial. More importantly, loan modification experts are master as structuring the loan modification package in a way that optimizes your NPV and puts your best foot forward.
