A home loan modification is quickly becoming the fastest and best way to avoid foreclosure. A mortgage modification is when the terms of a loan are permanently altered for the term of the mortgage. There are many questions home owners have about loan modifications and hopefully this article will help clear some of them up.
How does a mortgage modification help avoid foreclosure?
A mortgage modification is when a lender reinstates a loan with a lower interest rate and/or shorter term. This immediately halts foreclosure because all the back payments and arrears are either eliminated or added back into the loan. With a mortgage modification, many people are able to stop foreclosure and drastically reduce their monthly payments!
How do I qualify for a loan modification?
To be approved for a mortgage modification, you will need to prove that you have enough income to pay the reduced loan payment, but not enough to pay the arrears and continue with the previous payment. Home owners will need to give proof of income and proof of the hardship that caused the problem in the first place.
My servicer turned me down for a mortgage modification or has not approved mine yet. What should I do now?
In many cases, we see servicers automatically turning down mortgage modification requests, without taking all information into account. This is a result of both the servicers being overwhelmed and investors who do not want to provide modifications. Another nagging concern today, is when servicers tell homeowners that they are "working" on their case, when in reality nothing is happening. Eventually the home sells at auction and the house is gone forever, with no modification.
In most cases, a good modification agency can negotiate a better mortgage modification than you will get on your own, saving $1,000's per year. When you are not able to get a modification on your own, don't be afraid to hire a professional to get it done. Just make sure you do research and find an honest company to work with. Even when your bank has rejected a modification, it's very likely that you would get approved when using one of these companies.
Does the mortgage company have the right to inspect my house before a mortgage modification?
Yes. The bank may inspect your house to verify the value of the home. Another objective of the inspection is for the bank to affirm there is nothing wrong with the home that would stop the home owner from continuing with the modified payments.
What happens to all the late fees on my note with a modification?
With a mortgage modification, all the excess fees should be erased and should not be added to the total after the modification. If your bank is trying to include late fees in your new mortgage modification, you should dispute this and have them eliminated. With certain loans, when these fees are not waived, they are out of compliance with current laws. When the laws do not apply bank.
How much time does a mortgage modification take?
When trying for a mortgage modification, you need to make sure you allow ample time. We recommend a min. of 60 days preceding your sheriff's sale. If your mortgage servicer does not agree, or if they have not given approval to your modification within 45 days, then you need to seek an outside company to help. Foreclosure assistance companies can get your deal approved in as little as a few days, so if your modification is taking longer than a month, it's time to start thinking about other options.
The best advice not to forget when trying a mortgage modification is to not let your bank procrastinate until later or just before the auction. In most of the cases we see, when the lender does not finalize the deal within 30 days, they will likely not do it at all. This is when you need to push your lender more or decide to hire a professional to get the modification for you. Don't be frustrated if they turn down your modification when you are attempting it alone. Hiring a professional will cost a little up front money, but it will allow you to save the home and save you tens of thousands of dollars in the future. Nick publishes daily articles on the ForeclosureFish website, which aims to educate homeowners on how they can stop foreclosure while they still have time and resources available. Visit the site today to learn more about saving a home and recovering from a financial crisis, and download an e-book explaining the basics of how foreclosure works: http://www.foreclosurefish.com...
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