What is a loan modification?

A loan modification is a permanent change in one or more terms of a borrower's home loan, allows the loan to be reinstated, and results in a payment the homeowner can afford

Can the lender include late charges in the Loan Modification?

Per HUD, the accrued late charges should be waived by the lender at the time of the loan workout-this varies depending on the type of loan-but always request a complete breakdown and description of all fees and penalties from your lender

How will the new government programs help me get a loan modification?

The Federal government has allocated $75 billion dollars to subsidize lenders and servicers who offer a loan workout to their clients. Now, the banks will have a monetary incentive to offer help to qualified borrowers. In addition, homeowners who pay their new modified payments on time will be eligible up to $5000 credit to their loan balance.

How do I qualify for a loan modification?

The primer criteria for which your lender looks is your ability to make the new modified payment now and in the future. You need to supply proof of your income, along with a complete and accurate financial statement detailing your income and expenses to show, that if you’re granted the modification, you will be able to afford the new, lower payment.

Do I have to be currently delinquent on my payments to get a loan modification?

Most lenders are now accepting applications from homeowners who are not currently delinquent, but who are able to prove to their bank that due to imminent interest rate increases, they will no longer be able to afford the loan payment under the terms of their loan. It is advisable to contact your lender as soon as possible to start the loan modification process, regardless of if you are delinquent or not.

What is an acceptable Hardship situation?

Each homeowner has a unique set of circumstances that caused them to fall behind on their home loan, but generally the lenders consider divorce/separation, loss of income, death of spouse, co borrower or family member, illness, job relocation, military service to be acceptable reasons to consider a loan modification. A compelling hardship letter included in your application is a very important part of a successful application.

Will a loan modification help me stop foreclosure?

Yes, that is the goal-by working with your lender to find a loan workout solution, your loan is brought current and the foreclosure process is halted.

Can my missed payments be added back into my new loan modification?

Yes, the arrears can be added to the new loan balance and spread out over the term to allow the loan to be brought current.

Can I do a loan modification myself?

That is entirely up to you and your comfort level with dealing with your lender, but most homeowners seek the professional advice and knowledge from a company that has the experience with dealing with your lenders.