All or portion of the outstanding principal and interest, past due escrow, late fees, and even costs may be rolled into the loan modification and thus will not be lost revenue to the lender. Since they are spread over a long period of time, they do not pose a problem to the borrower.
Modified mortgages may use a step rate approach or an extended term methodology to provide for the repayment of the due and past due funds. The lower payments ensure the repayment by the borrower while to the lender the added time is actually money in the bank in terms of yet to be earned interest due.
Foreclosure is avoided and even though banks routinely foreclose on properties and sell the homes to other buyers for a fraction of a price, the slowing housing market has made it difficult for banks to unload such properties and then recover any additional funds from the previous homeowners. Loan modification is a fiscally much more attractive solution for any lender.
A modified loan protects the credit rating of a borrower and it also helps lenders in showing less defaulting loans in their portfolio. This of course makes a good impression when the financial institution is wooing potential investors.
How exactly does a Loan Modification work?
The first step is the free consultation. Simply call the number or apply on the website and one of our specialists will contact you within 24 hours.
After our initial conversation, we will be able to determine if you fit within the parameters for our loan modification program. During this initial consultation, you will be asked a variety of questions, please answer them truthfully and candidly as this will only benefit your overall situation.
If we unilaterally determine that you fit within our program, then we will send a Loan Modification Program Agreement containing a Borrower's Authorization. The Borrower's Authorization, enables our team to communicate with your lender. At this point, a username and password will be created for you on this website so that you may login at anytime and see your progress. You can also ask questions from our backend client interface.
In conjunction with the Loan Modification Program Agreement, we will send you the Loan Modification Financial Worksheet. These documents will address detailed aspects of your current and past financial history. Our loan modification specialists will work with you to complete these documents.
Once your documents are submitted to us, we will begin communication with your lender and creation of the package to be submitted to your lender. While we are creating the package, our staff will be conducting a forensic loan audit to determine if there are any predatory lending violations.
The process generally takes between 60-120 days to complete. Once complete we will present the new loan documents to you for execution. Apply today for your free consultation.
Filing bankruptcy is stressful, and it is not easy.The decision as to whether to use an attorney should be taken very seriously. After all you will have many questions throughout the process and if you mess up badly, your case could end up being dismissed altogether. Because of the long-term legal and financial consequences, you need to strongly consider obtaining sound legal advice.
| Option |
How Does the Option Work? |
Key Benefits |
| Repayment Plan |
Distributes your delinquent payments over a period of time, usually no more than 10 months. A portion of the deferred delinquent amount is added to the normal monthly mortgage payment. |
| » |
Brings your account up to date within a specified time-frame. |
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With a goal in sight, you can move forward knowing that your mortgage loan is secure. |
|
| Loan Modification |
A permanent change in one or more of the terms of the mortgage loan, allowing the loan to be reinstated to a "current" status, and resulting in a more affordable monthly mortgage loan payment. Past due interest and escrow are added to the new unpaid principal balance and re-amortized over the remaining life of the loan. |
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Changes the mortgage note itself, giving you a "fresh" start on managing your mortgage loan. |
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Brings your account up to date immediately once the loan modification is executed. |
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Partial Claim
(only for FHA loans) |
A second mortgage, interest free, that is paid off at the time when the homeowner's loan is paid off. This option allows up to 12 months of past due accrued mortgage payments to be included in the second mortgage. Available only on FHA loans. |
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HUD loan is interest-free. |
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Brings your account up to date immediately. |
|
Fannie Mae
HomeSaver Advance™
(FNMA Only) |
A low interest rate loan provided by the first lien loan servicer to bring current a customer's delinquent first lien loan. The loan repaid over a 15 year term, with payment and interest accrual deferral during the first 6 months after the advance. Available only on most Fannie Mae loans. |
| » |
Brings your account up to date immediately. |
| » |
Second mortgage is secured at a low interest rate. |
|
Home Affordable Modification Program
(HMP) |
Goal of HMP: Help the most at-risk borrowers in default and those that are at risk of imminent default stay in their homes through a modification process to establish an affordable monthly housing payment. The goal is to reach a monthly housing payment (which includes capitalized past due payments, principal, interest, taxes, insurance and HOA/condo fees) that is no more than 31% of the borrower(s) total monthly gross household income.
How HMP Works: Participating servicers and investors will work with eligible qualified borrowers to reach a more affordable mortgage payment through extending the term of the loan, lowering the interest rate, capitalizing delinquent mortgage payments, and/or forbearing principal. All outstanding late fees are waived.
Eligible Borrowers: Borrowers that are past due on first mortgage or are in imminent default, can be in foreclosure, own and occupy the property, and the property is a single family residence (1 -4 unit property, one unit of which is the borrower?s principle residence). Cooperative share mortgages and mortgage loans secured by condominiums and manufactured homes are eligible for HMP. First mortgages are only eligible for this program. The program will sunset on December 31, 2012, and first mortgage loans must have been originated prior to January 1, 2009. Borrower(s) may only modify one (1) time under the HMP program.
First Mortgage Loan Limits: First lien mortgage loans must have an unpaid principle balance (prior to capitalization for arrearages) equal to or less than the following:
- 1 unit property will be $729,750 regardless of property location
- 2 units: $934,200 regardless of property location
- 3 units: $1,129,250 regardless of property location
- 4 units: $1,403,400 regardless of property location
LTV: N/A to HMP qualification process.
Mandatory Escrow: Escrows for real estate taxes and homeowners? insurance must be set up under this program if they are not currently escrowed.
Required Documentation for Qualification Review: A signed hardship statement, verification of monthly gross household income (2 most recent pay stubs, most recent tax return, and signed IRS form 4506-T), and expense documentation as needed.
3 - 4 Month Trial Modification Requirement: For modification to be complete, if borrower is delinquent prior to modification, they must make 3 payments within 90 days at the new modified payment level and be current at day 90. If the borrower is current at the time of modification, the borrower must make 4 payments within 120 days at the new modified payment level and be current at 120 days.
Borrower Incentive: Borrower(s) are eligible to receive
Pay-for-Performance Success that goes towards reducing principal of $1,000 each year for (5) five years if they stay current on their mortgage loan.
Counseling Requirement: If the borrower has a back-end ratio (borrower total monthly debt ratio) equal to or greater than 55%, HUD approved housing counseling is required. Servicers are required to send a letter to applicable borrowers regarding the counseling requirement. The borrower must acknowledge in writing that s(he) will obtain such counseling at HUD-approved housing counseling agencies. to find a housing counselor in their area.
Note: The Streamlined Modification Program (SMP) and the Early Workout? Program expired in March 2009.
|
| » |
Changes the mortgage note itself, giving you a "fresh" start on managing your mortgage loan. |
| » |
Brings your account up to date immediately once the loan modification is executed. |
|
| Short Sale |
Allows you to sell your home and use the proceeds to pay off the mortgage if you are unable to maintain payments, even if the home's market value is less than the total amount owed. |
| » |
Avoids the lengthy legal process involved in foreclosure. |
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Typically less damaging to your credit rating than foreclosure. |
|
Deed in Lieu
of Foreclosure |
Allows you to voluntarily transfer legal ownership of your property to your investor if you are unable to maintain mortgage payments and cannot sell the home at current market value. |
| » |
Avoids the lengthy legal process involved in foreclosure. |
| » |
May be less damaging to your credit rating than foreclosure. |
|
Filing bankruptcy is stressful, and it is not easy.
The decision as to whether to use an attorney should be taken very seriously. After all you will have many questions throughout the process and if you mess up badly, your case could end up being dismissed altogether. Because of the long-term legal and financial consequences, you need to strongly consider obtaining sound legal advice.
Filing bankruptcy is stressful, and it is not easy.
The decision as to whether to use an attorney should be taken very seriously. After all you will have many questions throughout the process and if you mess up badly, your case could end up being dismissed altogether. Because of the long-term legal and financial consequences, you need to strongly consider obtaining sound legal advice.
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