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What is Loan Modification?

Loan modification is a process that allows homeowners and lenders to change the terms of a loan in order to help the borrower stop foreclosure. A loan modification is NOT a new loan. It is the renegotiation - or loan restructuring - of an existing mortgage note. For homeowners behind on their mortgage, or those with a low credit score, a loan modification is often the only option available because they are unable to get approved for a mortgage refinance or a short-refinance.

A loan modification can be done in several ways or combination of ways listed below:

the loan's interest rate may be decreased
the interest rate could be changed from an adjustable to a fixed rate
the period of time the borrower has to pay the loan back can be lengthened
the type of loan could be changed altogether

Many borrowers are facing foreclosure because their interest only or variable rate loan interest terms have sky rocketed beyond what they could have imagined. A loan restructuring is an agreeable way for both the lender and the borrower to avoid the cost and hassle of the foreclosure process.

Our staff will assist you in supplying the appropriate information to your lender to negotiate the appropriate measures to modify the term(s) of your mortgage and our negotiation staff will apply proven strategies in order to secure a fair and beneficial loan modification from your lender. This could lower the interest rate, lower the principal balance, and/or extend the term of the loan resulting in lower payments. Call us If you want to talk to a mortgage advocate about participating in this program.

REPAYMENT PLAN/FORBEARANCE

If you have incurred a short term financial hardship and your loan is two or more months past due, your loss mitigation specialist will also consider submitting a request for a payment plan to your lender for approval. Only after reviewing your financial situation will this option be considered. All clients must be able to show that they can afford this plan in order to be eligible. Call us If you want to talk to a mortgage advocate about participating in this program.

DEED-IN-LIEU OF FORECLOSURE

In general we consider this an option of last resort.
If you have incurred a long term financial hardship and your house has been on the market (at fair market value) for at least 90 days, you may be eligible for a deed-in lieu of foreclosure. To be considered for this option, you must complete a financial package and provide a copy of your recent active listing agreement. Also, there cannot be any additional claims or liens (other the mortgage) against the property. If you are approved for a deed-in-lieu, you will be giving up all rights to the property and the property will be conveyed to your investor. In exchange for the deed-in-lieu, the lender may waiver all deficiency judgment rights. You may be asked to participate in a Short Sale program before a deed-in-lieu of foreclosure is accepted. Call us if you want to talk to a mortgage advocate about participating in this program.

SPECIAL FORBEARANCE

(FHA loans only) (Type I & II)
If you have incurred a short term financial hardship and your loan is 90 days to 365 days past due, the loss mitigation specialist will also consider submitting a request for a special forbearance. A special forbearance is designed to provide you with more relief than is possible with a regular repayment plan. Typical approval can result in spreading the repayment over 12 to 18 months. Type II – can be utilized in an unemployment situation whereby the promise of future employment is present. We have done VA loans that resulted 27-month repayment plans. Call us if you want to talk to a mortgage advocate about participating in this program.

PARTIAL CLAIM

(FHA mortgages only) (Some Freddie Mac Investor loans)
The loss mitigation specialist may assist in requesting a partial claim if you qualify. You may be eligible if your loan is 120 to 365 days past due. A partial claim results in placing your past due payments into a subordinate mortgage (2nd mortgage) between you and the Secretary of Housing Urban Development. The partial claim note will require you to start making payments when you pay off the first mortgage. There is no interest. The partial claim can be for no more than 12 months of past due payments. Call us if you want to talk to a mortgage advocate about participating in this program.