Whether you call it a loan modification, mortgage modification, restructuring, or a workout plan it can all seem very confusing. A loan modification is when a borrower - who is facing financial hardship and is having difficulty making their mortgage payments, our attorneys work with you're your lender to reduce the monthly payments and change the terms of your mortgage.
A large number of homeowners will use loan modification to prevent getting into difficulty or even foreclosure on their home.
According to the Department of Treasury: "Anyone with high combined mortgage debt compared to income or who is "underwater" (with a combined mortgage balance higher than the current market value of his house) may be eligible for a loan modification. This initiative will also include borrowers who show other indications of being at risk of default. Eligibility for the program will sunset at the end of three years."
We include a forensic audit of all closing documents, This service includes a review all loan documents and perform a thorough investigation for miscalculations and to determine if the loan terms are accurate, truthful, and met the requirements of the applicable federal statutes.
Truth-In-Lending Act (TILA) Violations - Inaccurate reporting of APR and finance charge calculations on borrower disclosures. Calculation errors often occur as a result of failing to include one or more prepaid finance charges in the calculations, incorrect disclosed funding dates, or last-minute changes made to the loan by the settlement agent at the closing table. If understated, the lender is in violation of the federal Truth-In-Lending Act as well as many state laws prohibiting such actions. Lender required to reimburse borrower for the difference, and may be subject to statutory damages, administrative sanctions, loan buy-backs, and lawsuits. In addition, the rescission period may reopen, creating additional risk for the lender.
The first step to stop foreclosure is to contact the lender, explain your difficulties, don't avoid any calls or correspondence.
Terms explained
Loan Workout - A loan workout is when we negotiate with your lender any kind of plan that will benefit both you and the lender, This is a broad term used in the industry to cover the different options you may have such as a loan modification, repayment plan, short sale, forbearance plan etc.
Loan Modification - This is when the lender modifies your current mortgage in order to work with you and make your mortgage more affordable. In the past this was only used when a borrower was in arrears, but now this is not necessary.
Forbearance - This is used most of the time, when a Notice of Default has been issued. It may be agreed to delay or reduce payments for a short period, with the understanding that another option will be used at the close of that time to bring your account more current, Your lender, may then temporarily cease legal action.
Short Sale - This is used if a modification cannot be agreed, the lender agrees to accept less than is owed in the sale and take a loss. You place the home for sale and any offers are presented to the bank.
Deed-in-lieu - is a deed instrument in which the borrower agrees to hand over the property to the lender, without legal action being required, if both parties are in agreement.
Your application is reviewed by our Attorney prior to acceptance.
Loan modifications on average take 90-120 days, depending on the lender.
No. Responsible borrowers who are struggling to remain current on their mortgage payments are eligible if they are at risk of imminent default, for example, because their mortgage payment has recently increased to a level that is not affordable. If you have had or anticipate a significant increase in your mortgage payment or you have had a significant reduction in income or have experienced some other hardship that makes you unable to pay your mortgage, contact your servicer. You will be required to document your income and expenses and provide evidence of the hardship or change in your circumstances.
Mortgage modification doesn't hurt your credit. In fact, it'll help restore your credit when you start making payments as per the modified terms and conditions. As long as there aren't any late payments or default under a modification program, your credit will be fine.
If you would like a Certified Mortgage Modifier to contact you about assisting you with a modification please complete the form below. You will be contacted by a Certified Mortgage Modifier in your area ASAP.
Please type brief explanation of your situation in the comment section so we have a good understanding of your problem.
Always make sure you choose a Certified Mortgage Modifier.
Thank you,
Martin McGill
Have a question you need answered? Click here to post a question and get the answer you need.
See other people's questions below.
Hello Kevin!
This is Cowboy.remember me? Sam asked me to email you this situation that we ran into to
see if you have any input/suggestions.
The mortgage company we are dealing with is Cit Mortgage. I called to do a status update on
the file and got transferred to their bankruptcy department and they said this particular
loan does not qualify for a loan modification due to the fact that they filed for chapter 7
bankruptcy and file has already been discharged. The loan needs to stay the way it is.
Sam wanted to know if you have any suggestions what to do from this point?
Thanks for your help!
When a homeowner files BK they are no longer held responsible for the debt although they
can keep the loan if hey desire. The lender can do a modification but does not have
motivation to do so because they have no recourse.
To get a modification after or during a BK the homeowner must have some leverage, like
negative equity. If the home has negative equity you can call the lender back and tell them
the homeowner wants to keep the loan if the lender will do a modification but if the do not
budge they will walk away.
This is the only thing you can do at this point.
I hope this helps.
Kev
When doing a Loan Modification can you do it with another bank or do you have to use
the the lending organization that provided you with the loan?
San Jose, CA
A loan modification is with the lender you currently have. When you modify a loan the only thing that changes are the terms of the loan. If you want a different lender you need to have a refinance. If you have negative equity you need to get a short refinance and this is very difficult.
Have you done loan modification on income property? Can it be done? Self employed
borrowers?
Bonita
Los Angeles, CA
Answer:
You can get a modification done on rental property just like you can your primary home. You
can also get it done if you are self employed. The only difference is how you prepare your
game plan.
I got a modification from my bank a few months ago but they only took my rate down to
7.5% and the payment will go back up after a year. Is it possible for you to get a new
modification and lower my rate?
Louis R
Reno, NV
Answer:
Oh boy, you should have gotten a much better rate. 7 1/2% on a modification is not low
enough. Most lenders can go down to 4.5% and that is a much lower payment for you. Some
times the lenders only give you what they think they can get away with. Remember, the
lenders have to do everything they can to get the most amount of money out of you they can.
When the lenders deal with the homeowner they know you will take less than we will. We
remove all of the emotions out of the equation and it becomes purely business.
What is the biggest challenge you face in getting a modification done?
Terry J
Lancaster, CA
Answer:
The biggest challenge we face in getting modification done is reworking the budget so it
fits in the lenders profile.
I have heard about the new FHA program coming out in October. Should I wait to see what they will do for me? Susan P Stockton, CA
Answer:
I would not wait to see what the Gov does to help you. One thing you need to realize is
their program is designed to only help about 400,000 families. Last month we had almost
400,000 that went into foreclosure, so the odds of your family being one of the very few
they help are very low. Also, why would you want to wait on them to help you when you can do
a better job dealing with your own lender and keeping the loan with them? Your lender wants
to help you because it is in their best interest to do so. If I were you I would contact a
Certified Mortgage Modifier and have them prepare a package that will give me the best
opportunity of success in getting a modification done.
I called my bank and they told me I had to be behind on my payments to get a
modification, is that true?
Thank you,
Joan
Fresno, CA
Answer:
No, you do not have to be behind on your payments to get a modification done. You may have
been speaking with the collections department. You need to speak with the Loss Mitigation
Department and tell them you are being proactive and know that you can not afford to keep
making the same payment and ask them to lower your rate.
I have two loans on my home can I still get a modification done?
Tyrone
Phoenix, AZ
Answer:
Yes you can still get a modification done. I would work on both loans at the same time.
I lost my job and have no income at the moment. My lender told me that they would not
work with me because I have no income. What can I do as I am afraid I am going to lose my
house?
Whalen
Sacramento, CA
Answer:
When do you think you will have another job or at least some type of income? The banks do
not want your house; they want you to make your payments. The reason they told you that you
did not qualify is because they do not want to give you a modification now and then come
back and foreclose in the future. They would rather foreclose you now and move on. We need
to see how long you may be out of work and what you expect your new income will be. Ask the
bank to give you a forbearance for 90 days to get your finances together and then lower your
rate to make your new payment more affordable.