You desperately need a loan modification to avoid foreclosure and keep your home, but you haven't gotten one yet. Why?
There are two big reasons people don't get a loan modification when they need one. One is that they mistakenly think that they can't qualify. The other is that they try to apply, but the process is frustrating and they give up or fail.
What you don't know can hurt you, and some homeowners simply don't know what they need to about loan modifications or they believe things that are incorrect.
Let's take a closer look at how this happens, what the real facts are, and what you can learn from other people's mistakes to get the results you want.
You may think you can't get a loan modification because:
HAMP is expired.
HAMP, the Home Affordable Modification Program, was the federal government's loan modification program. It expired at the end of 2016, but in-house loan modifications from banks are still being given. Since HAMP ended Amerihope Alliance Legal Services has continued to get our clients great in-house loan mods that allow them to avoid foreclosure and keep their home.
You're too far behind/owe too much.
Being really far behind doesn't necessarily mean that you can't get a loan modification. We've had clients who were more than $325,000 or even nine years past due and they still qualified for a loan modification. The amount you're behind can be dealt with by rolling it into the principal balance, making it due as a balloon payment when the loan matures, or by eliminating it. Being far behind does present a challenge, but it's a mistake to assume that you won't be able to get a loan modification because of it.
You don't make enough money.
It's common for homeowners to fall behind on their mortgage because they lost their job. Sometimes, when they get another job it doesn't pay enough to afford their old mortgage payment. Does that mean that they'll never be able to get a loan modification and keep their home?
Loans are often modified to have a 40 year term and lower interest rate, which can bring the monthly payment down to where it's affordable on your current income. Don't let the fact that you earn less money than you used to discourage you from applying for a loan modification.
You had a loan mod before.
It is possible to get a second loan modification after you've defaulted on your already-modified mortgage. Some people have had three, even four, loan modifications! It's not guaranteed, but it is possible to “remodify” your already-modified mortgage.
You have bad credit.
Your credit score is not relevant when you're getting a loan modification! If a credit report is pulled, it may just be to verify your car payment and credit card payment information. All that matters for your loan modification is that you have enough income to make the proposed monthly mortgage payments.
You applied and were denied.
Everybody gets denied at first! Well, not everybody, but many people are denied, and then subsequently approved. It's part of the process. When you are denied, you should be given a reason why, which you may be able to fix so you can get approved. Sometimes you just need to give more information or make a minor change to your application.
Being denied does NOT necessarily mean that you will never be able to get a loan mod.
You have a foreclosure sale date.
It is of course better too act as soon as possible, but don't assume it's too late to get a loan modification because you have a sale date. Your bank is required to stop a sale when a complete loan modification application is accepted as complete at least 37 days before a scheduled sale. The bank could also voluntarily stop the sale less than 37 days before the sale. There may be foreclosure defenses that can be used to stop an upcomine sale date.
What are the real factors that will stop a loan modification?
So, if the the things above will not necessarily prevent you from getting a loan modification, what will? Not having enough income to afford the property is one thing that will definitely prevent you from getting a loan modification. No bank is going to give you a loan modification when you don't have the income to make the new modified payments. Your bank needs to be convinced that you have a reasonably good chance of performing on the loan long term to approve you for a loan modification.
If your income from your job isn't adequate, you still may be able to qualify for a loan modification by documenting money you receive from working members of your household. For example, if you have adult children who pay utilities or rent, you can tell the bank about that and it could help.
There's a lot to know about loan modifications, and a lot of potential for the wrong information to be assumed. If you need to get a loan modification, you should start by educating yourself on the subject. There is a tremendous amount of information available for free online, including on this blog.
There is no substitute for having a qualified professional working for you. A foreclosure defense attorney who also assists with loan modifications may be able to get you results that you can't on your own. And knowing that your case is being taken care of by an experienced attorney is invaluable.
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