What is a loan modification?

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 is having difficulty making their mortgage payments - works with their lender to change the terms of their mortgage loan. The workout plan could result in temporary or permanent changes to the mortgage rate, term and monthly payment of the loan. The plan's goal is to help the borrower reduce their monthly mortgage payments to 31% of their gross income. Under Obama's bailout plan, loan modifications will be standardized, with uniform loan modification guidelines used by Fannie and Freddie Mac, and then they will be implemented throughout the entire mortgage industry.

Who's not eligible for a loan modification?

Lenders will give unrepresented clients all types of excuses why you supposedly don't qualify for loan modifications. The mortgage companies want to keep you in the highest payment as possible. Almost half of the people we have helped have been turn away when trying on their own. We have also helped many people who received less than favorable terms from their mortgage company and were looking to see if we could do better for them. The only real reason you would have difficulty obtaining a loan modification is if you already received a loan modification in the last 12 months.

Will I be able to skip a payment while we are working to modify my loan with my lender?

Yes, in many cases your lender might allow for “skipped payment” while working on the terms of your loan modification.

What if I am already several months behind on my mortgage? Can I still qualify for loan modification?

Yes, we have seen success with people behind over 1 year or longer, the sooner you take action the better.

Will a loan modification negatively affect my credit?

No, in fact if you are behind on your payments it will help your credit because once your modification is executed your lender will, in most cases begin reporting your payments as “on time” and “paid as agreed”.

If I have been declined for a refinance will I qualify for loan modification?

Loan modification is not credit score driven like refinancing. So if you have perfect credit or very bad credit it does not make a difference.

Is it possible to stay in my house after foreclosure proceedings begin?

Contrary to what you might think, there are still options available to you after the foreclosure process has started. The sooner you take action the more tools that will be available to help you fix your situation.

Do I need to be behind on my mortgage payments to be eligible for a Home Loan Modification?

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 reduction in income or have experienced some other hardship that makes you unable to pay your mortgage.

Should I refinance or modify my existing mortgage?

If you are locked into a burdensome mortgage, refinancing is certainly an alternative. However, with the sharp decline in real estate values, it will probably be very difficult to obtain the proper amount of financing to pay off your existing mortgage. Additionally, there are many thousands in closing costs. A mortgage modification avoids these problems. We work with your existing lender to modify the mortgage you already have and negotiate to reduce your interest rate and/or term. Best of all, the cost is surprisingly small.

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