Loan Modification. What it is and how it may help you.

Loan modification may be an alternative for home owners facing foreclosure in the difficult 2008 housing and credit market. Unfortunately, there is a great deal of misinformation about the both the loan modification process and the reasons you may want to consider a loan modification if you are having financial difficulty.

I have been a professional mortgage broker since 1991. To assist those who I am unable to help with a refinance during this difficult credit market, I have associated with an attorney based firm offering loan modification help to homeowners trying to save their home. Nationwide Home Relief, LLC. is committed to assisting homeowners who are struggling to make their mortgage payments. This team of Loan Modification specialists will represent your best interests. They negotiate with your lender in an effort to stop foreclosure and find a long term solution to your problem. 

A loan modification is an agreement that is negotiated with your lender that changes the terms of your current loan. Lenders can be willing to negotiate when you are facing financial difficulties and can not find other financing alternatives. You must be able to show your lender why it would be in their best interest to agree to a modification. A lender may be willing to reduce the interest rate, monthly payment or change other terms. It is important to understand that a loan modification is not reported to the credit agencies and will not have an adverse impact on your credit scores.

You may consider loan modification if you:

Can not refinance

Have an adjustable rate mortgage

Are behind on your mortgage

Your mortgage payments are too high

Have a hardship

Are self employed

Have no equity in your home or are "upside down"

If your lender refuses to accept partial payments

If you are in or about to go into foreclosure

What should you do when you get behind on your mortgage?

Do not ignore this issue. A sheriff may evict you from your home. This is a serious matter and is extremely time sensitive.

Stay in your home. A vacant home is harder to qualify for help. This is your home, stay there.

What is the Foreclosure Time Frame?

Usually 90 days past due will trigger the mortgage lender to issue a Notice of Default. Once the NOD is issued, the lender will hire an attorney and begin the Foreclosure process with the court system. This is were the attorney's fees start piling up and getting really expensive. The foreclosure process has a very strict procedure, which is different in each state. If no foreclosure prevention action is taken, eventually the house will be sold at a public auction.

What are your options?

You have several options to help stop or prevent foreclosure. Every option is different and has certain requirements to get approved by your mortgage lender. We will advise you of your best option based on your individual circumstances. You will have to qualify for an option and the lender has to agree to specific terms.

Different loan modification options include:

Reinstatement Plan

The Reinstatement is basically the total amount that is past due including late fees and attorney costs. Paying the past due balances will get your mortgage caught up immediately. There might be a huge amount of past-due fees which could include back payments, late fees and legal expenses. Reinstatement might be accomplished if you can promise a lump-sum to bring your payments to a current status by a specific date.

Repayment Plan

A common way to bring a loan current is the repayment plan. Many lenders will require that up to 50% of the past due balance is to be paid. While this sounds great, in many cases this is just not possible. After all, if you had 50% of the past due balance, you probably would not be that far behind. You will still need to collect all the documentation but will ask that your lender work with you on obtaining a reasonable amount of money from you to bring your loan current.

Loan Modification/Loan Restructuring

Many people will find themselves using a Loan Modification Plan to stop foreclosure. If you can currently make your regular payment, but you cannot catch up with the past-due amount, you may negotiate with your lender to roll any past-due amounts, including interest and escrow, into the unpaid principal balance.

If you are unable to make payments at this rate, you will need to negotiate with your lender to extend your loan for a longer period of time, modifying the loan amount to a more affordable level. You may be successful at lowering the interest rate, giving you a lower monthly payment which you can afford. If your rate has adjusted, you may be able to have the rate adjusted back to the lower rate.

Loan Forbearance

Loan Forbearance is designed to give people time to gather their assets. During Loan Forbearance, the mortgage company allows you to delay or reduce payments for a short period. This delay does come with a commitment and understanding that another option will be used after the short period to bring your mortgage to a current status. This could delay and even terminate the legal action taken by your lender.

Partial Claim

Partial Claim only applies to clients with current FHA loans. Your mortgage company might agree to help you with a one-time payment, which would come from the FHA Insurance Fund.

Qualifications needed for this help may include:

Must be at least 4 months delinquent, but no more than 12 months

Able to begin making full payments again

Resolution of past hardship

May or may not be in Foreclosure

The mortgagor has the ability of long-term financial stability to support the mortgage debt or make the payment

If the home owner cannot bring the loan current through a forbearance of loan modification

Property is primary residence

HUD will require a signed promissory note. HUD will then place a lien on your property which is interest-free and will allow you to bring your loan current. However, the balance of this loan will be due when you pay off the loan or sell your home or leave the property.

Terms for Partial Claim:

Interest-free Note.

No monthly or periodic payments

Note due when the mortgage is paid off or when the home owner sells the property

No repayment penalty

A refund can be applied for the mortgage insurance premium when the note is paid in full

Note payable to HUD

Partial payments can be made by cashiers check or certified funds

Finally, The Partial Claim may be combined with alternate plans. Even special forbearance may be combined to be more flexible for the home owner.

Pre-Foreclosure Sale

If you are willing to sell your home or currently have your house on the market, some lenders might agree to put your foreclosure on hold while you attempt to sell your home through traditional real estate methods. This will stop the foreclosure process and may allow you to sell your home and walk away with some money in your pocket, rather than losing it! In some occasions, the new investor may be willing to give you a lease option to buy.

Short Sale

For some home owners, selling their home and starting over is actually the relief that they need. Home owners might review their financial portfolio and realize that they obviously cannot afford their home anymore. Most home owners have finally realized this after a long period of time, then have tried to sell their home the original way and have had no success.

Due to recent and current market fluctuations and changes beyond your control, many home owners cannot sell their home for their current offering price. This is where a Short Sale comes in and allows you to sell your home at a discounted price.

Deed-in-Lieu of Foreclosure
A Deed-In-Lieu procedure allows the home owner to give the property voluntarily back to the lender. Often, the debt or deficiency is forgiven. A Deed-In-Lieu will not save your home, but may be used to avoid a long legal process of foreclosure and increase your chances of getting a loan in the future. Deed-In-Lieu will have a negative affect on your credit. However, it is often a better alternative to a foreclosure.

Loan modifications can be arranged for any type of home and it does not matter if the home is owner occupied or an investment property.

Can you try to negotiate with the lender on your own? Of course you can. Just as if you were being sued, you have the right to represent yourself in court. However, that is usually not the best idea.

Homeowners who are behind or in default are in no position to effectively negotiate with their lender. A professional mitigation team of attorneys will build a case which places the lender in an obligatory position. Statistically, a legal team will get you a much better deal than you can accomplish on your own.

It is very difficult to effectively negotiate with your lender when you are behind on your payment. We separate the emotions and turn this into a business decision for you and the lender.

Call me TODAY to see if a loan modification will help you save your home.

Bob Gammache, CMPS

(888) 648-1714

Nationwide Home Relief, LLC

105 Clearcreek Ct

Moneta, VA 24121