A number of mortgage lenders in the US were not loyal to their word and this led to many homeowners losing their houses through foreclosure. Many homeowners in the US want to know if there is anything that can prevent foreclosure. Foreclosure rates are highest in New York, New Jersey, Florida and Pennsylvania and homeowners there may want to know if there is anything they can do anything to remedy the situation.
Is your financial situation too bad to enable you pay back your mortgage? Are you about to face or facing a foreclosure? Instead of getting depressed, look for ways to stop the foreclosure. If you already know the date of the sale, contact your bank or mortgage lender to see if you qualify for a loan modification. A loan modification can significantly reduce your payment and get rid of any debts you may have.
In most cases, your lender is likely to consider revising the initial loan terms and conditions. The debt can be restructured and/or the loan period extended.
What is Loan Modification?
A loan modification refers to changes made to the initial loan agreement to make it easier for you to make your monthly repayments, offset your debt and keep your home. To qualify for a loan mod, you need to prove that you have a financial hardship or the lender’s mistake caused the loan problem. Your lender can initiate a loan modification for you or you can apply with the government.
Some government mortgage plans reduce your interest rate as well as re-amortize your loan on condition that you are current on the mortgage. To qualify for other plans, you may be required to already be late on the mortgage. You should be clear and sure which type of loan mod you want to apply for.
Loan modifications offered by the US government include:
a) HARP (Home Affordable Refinance Program). Allows you to finance your home through nontraditional means. The loan is suitable for homeowners whose properties have decreased in value and they cannot refinance.
b) HAMP (Home Affordable Modification Program). This loan decreases your mortgage payment to 31% of your monthly gross income, thus making your payments affordable.
Many mortgage lending institutions offer loan modification services to homeowners in New Jersey, Pennsylvania, Florida and New York. The lenders consider homeowners whose ability to repay the loan has been interfered with. To apply for loan modification, you need to fill an application form. A foreclosure lawyer or mitigation expert can guide you on preparing the application.
Facts about Loan Modification
- A successful loan modification will stop a foreclosure.
- Allows a homeowner to keep home for a longer time.
- Makes it easier for you to repay your monthly loan installments.
- Adjusts the terms and conditions of your mortgage loan.
- A loan modification attorney can negotiate on your behalf
Applying for a loan modification does not mean that the foreclosure process will immediately stop. Therefore, you cannot usually apply for a loan modification days before the foreclosure sale date. It is, however, evident that a loan modification can indeed prevent a foreclosure.
When applying for a loan mod, you will be required to explain to the lender in detail the reason why you are not able to repay the loan. Be honest with your answers because the lender may ask for proof, such as your financial information including bank statements, pay slips, tax returns and so on.
Many lenders will approve you for a loan mod if you have hardships like loss of income, medical bills, death in family, illness, reduced income, incarceration, property damage due to vandalism or natural disaster, etc. Getting a loan mod is not guaranteed. If your application was unsuccessful, you may need to find another way of stopping the foreclosure.
If you do not want to lose your home, a loan modification is exactly what you need. Hire a loan modification lawyer, organize your house finances and prepare yourself to talk about your financial hardship to the lender. These are the three major things you must do to qualify for a loan modification.
What was your experience with loan modification? Did you lose your home? Share with us what you went through.