The Most Important Thing Is To Realize That You Have Options And Not Give Up Hope!
Loan Modifications are changes to your loan agreement outside the original terms of the contract agreed to by the lender and you due to hardship. A Loan Modification is a permanent change in one or more of the terms of your loan, allowing your loan to be reinstated, and resulting in a payment you can afford.
When your lender approves your Loan Modification request, it becomes a permanent solution to the repayment terms of your existing mortgage loan. A Loan Modification helps to reinstate loans, reduce the interest rate of the loan, reduce the balance on the existing loans or stop foreclosure proceedings.
Some of the Benefits of Mortgage Loan Modification Are:
Lower Interest Rates;
Forbearance For Part Of Principal Amount;
Rising Adjustable Rates Turned Into Low Fixed Rates;
Past Due Mortgage Payments Forgiven;
Unattainable Repayment Plans Eliminated;
Occasionally Principal Reductions
As part of the Modification Agreement, your account will be brought up to date as soon as the terms of the modification are negotiated and accepted. Your payments get more affordable, and you don't have to default on your loan. A home Loan Modification will change your existing mortgage note and can give you and your family the fresh start you deserve. A Loan Modification must be initiated by you or your representative
A compelling hardship letter included in your application is a very important part of a successful application. While you have a unique set of circumstances that caused you to fall behind on your home loan here are some general categories that lenders accept as reasons for financial handship:
Death Of Spouse, Co Borrower Or Family Member;
Loss Of Income;
Why do Banks Offer Loan Modification?
When borrowers get in trouble, they can't make loan payments. The bank is left with a few options that are unattractive for everybody. Often, the best option is Loan Modification. Loan Modifications allow the bank to make loan payments more affordable for you. They do this by altering your interest rate, the term of the loan or the monthly payments.
Banks choose to offer Loan Modification programs because it is easier to work with you than to go after you. Their other options include:
Attempt to repossess property (a home foreclosure, for example.
Attempt to collect (through wage garnishment or a bank levy), or hire a debt collection agency.
Foreclose and sell your house at auction.
Watch you declare bankruptcy and receive little or nothing.
None of these options are attractive to you or the bank. Ultimately a foreclosed house is sold at an auction and in our current market conditions likely to bring in less money from the sale than the value of the loan. With those alternative options, modifying a loan so that you can afford it provides the lender with immediate current income and the long term prospect of realizing the mortgage's full value.
Banks offer Loan Modification so that they don't have to do any of the above. Also the Federal Government has allocated $75 billion dollars to subsidize lenders and servicers who offer a loan workout to their clients. Under the Making Home Affordable Program you have a couple of options.
To determine if you may be helped by modification take this simple test. Using the calculator below - input your gross monthly income - the total amount of money you receive each month from all sources before taxes. Then multiple that amount by 31%. The amount you get will be the amount you pay if you qualify for a mortgage Loan Modification. If this amount is less than the amount you are currently paying then Loan Modification can help you.
The entire process can take anywhere from six months to more than a year. The government programs that form the basis of the Mortgage Loan Modification process have set time limits. The Home Affordable Refinance Program (HARP) expires on June 10, 2011. Your refinance under HARP must have a mortgage note date on or before that date.
The Home Affordable Modification Program (HAMP) expires on December 31, 2012. Your trial modification must be in place by that date. We offer a free one half hour phone consultation.