A loan modification is a permanent change in one or more of the terms of a homeowner's mortgage that allows the mortgage to be modified with new terms, and results in a payment the homeowner can afford. It is not a refinance and does not require a certain fair isaac score as they are not taken into consideration.

In utilizing the mortgage workout option to bring an asset current, can the loan holder include all fees?

Legal fees may be capitalized into the modified mortgage balance.

May a bank perform an interior inspection of the property if they have concerns about property condition?

Yes, the loan holder may conduct any review it deems necessary to verify that the property has no physical conditions which adversely impact the bank's continued ability to support the modified note payment.

Can a loan holder include late charges in the Mortgage Modifications?

Accrued late charges should be waived by the lender at the time of the Loan Workouts and for the most part are. There are rare occasions that the lender would add them onto the principal balance.

When utilizing a Loan Workouts option, can a FHA lender capitalize an escrow advance for Homeowner's Association fees?

bank must also escrow funds for those items which, if not paid, would create liens on the property positioned ahead of the FHA-insured mortgage. It actually does not matter whether it is FHA or Conventional when modifying a loan as all Loan Modifications require an escrow account no matter what the situation.

Is there a new basis interest rate which loan holder may assess when completing a Mortgage Workouts?

The new FHA basis interest rate is 200 points above the monthly average yield on U.S. Treasury Securities, adjusted to a constant maturity of 10 years.



Are servicer required to perform an escrow analysis when completing a Foreclosure Modifications?

Yes, loan holder are to perform a retroactive escrow analysis at the time of the Mortgage Workouts to ensure that the delinquent payments being capitalized reflect the actual escrow requirements required for those months capitalized.

Can a mortgage company qualify an asset for the Loan Modification option when the homeowner is unemployed, the spouse is employed, but the spouse name is not on the mortgage?

Based upon this scenario, the mortgage company should conduct a financial review of all household income and expenses to determine if surplus income is sufficient to meet the new Foreclosure Workouts payment, but insufficient to pay back the arrearage. As long as there is surplus based on the banks requirements there is no problem to modify the loan. It does not matter who is or is not on the mortgage, it is all based on who lives in the house.