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.

The U.S. government, now more then ever wants to help home owners remain in their homes. The government realizes
that in order to correct the current crisis that our country is they have to
attack the core of the issue. That is the housing crisis.

Due to unscrupulous lending over the last few years, many homebuyers got into
loans that they did not understand nor could afford. It is this type of lending
that has gotten us into one of the worst housing crisis that our country has
ever experienced. Homes are being foreclosed at record numbers and neighborhoods
are falling apart. The government now realizes that if they are to correct the
current situation that our country is in, they have to start by keeping home
owners in their homes.

Through the recent stimulus package, as well as through other programs, the
government has given incentives and has urged lenders to make sure that they
make every effort to keep home owners in their homes. The government wants to
assist you. Take advantage of this tremendous opportunity and modify your loan.

Don’t become a statistic in this foreclosure crisis, change your fortune and
stay in your home.

All about Short Sales

There are times when a mortgager finds that he can no longer pay off the whole loan due to adverse financial problems. In this situation, the bank or the lender may consider it better to settle the affairs by ‘discounting’ the loan balance. This process is known as short sale. In simple terms, you do not have to pay the amount that you borrowed initially.

What’s in it for the Lender?

Even if it is the last resort for the lender, he may consider a short sale in certain cases that we call ‘hardship cases’. This could include permanent disability, financial insolvency, criminal convictions, and layoffs from jobs. In such a scenario, he figures that some money is better than no money!

How about the Bank?

When it comes to real estate, a bank stands to lose more money if it goes in for a foreclosure of a property. There are so many expenses to be considered, like fees for the attorney, costs incurred in selling, eviction and property maintenance etc. Besides, foreclosures have a tendency of dragging on for a longer period of time. So, thinking about all the interest money they could lose, banks usually find in favor of a short sale as the money comes in much sooner.

Does it affect the Borrower Adversely?

If your credit rating is worrying you, don’t be. The loan shows up as paid on your credit report. For all intents and purposes a short sale is better for your credit rating than a foreclosure. There is also a lot of stress and stigma that is associated with a foreclosure. By opting for a short sale, you can save yourself a lot of pain.

Considering the current economic situation, several financial giants have had to consider offers they wouldn’t even look at if all was well. Borrowers, therefore, have a better negotiating power in these times. Fight for better terms than have been offered to you. Chances are that you’ll actually get them.

Should I consider a Loan Modification Department?

Yes. The Loan Modification Department has the technical know-how and can deal with lenders and banks smartly. They can offer valuable advice in restructuring your loans and negotiate for more affordable payments. Most lenders do not take you seriously if you do not have legal aid. With a loan modification attorney backing you up you are going to get the best possible deal. And there’s much less hassle for you.

Useful tips to hasten the loan modification process

One needs to keep pace with time to avoid foreclosure. One of the means, which can slowdown the process of foreclosure, is a home loan modification. However, initiation of a home loan modification in itself will not be a solution and you may lose other options in case you prefer to wait. There is bound to be delays in a home loan modification process, as most of the lenders do not have the requisite staff or adequate experience to handle the applications. The process might take months to materialize even if you were to seek the assistance of a shrewd attorney.

You need not wait for the process to take its own course. In order to speed up the process, you can initiate some simple steps from your side. These steps will yield positive results once the process gets underway for home loan modification.

1 Documentation is very essential in such circumstances. It is advisable that all things are recorded and kept in a file. The recordings should include the conversations with the lender and the attorney overseeing loan modification. Documenting will avoid unnecessary delays, as the small lenders may lose track of your application. All transactions should be recorded and receipts, if any, for those transactions should be kept correctly. I would advise that photocopies be taken of the original receipts.

2 You should prepare the requisite financial statements. A financial statement of your assets and liabilities is an essential aspect in a home loan modification. The lenders will be having their own format and ask you to fill up in that format. When you are asked to fill up in their format, you will have all the details from your statement, and there will not be any delay in filling up in the lender’s format.

3 You should give as much information as possible from your end, as lack of information or insufficient information should not delay the process. The lenders need not call you for any further information. The typical information that need to be provided in a worksheet should include :

• contact information such as address, phone number of home and office, fax number and email address
• Details of the property including the estimated value
• Details of current income as well as any additional income such as child support, welfare etc.
• Total assets you possess own – including real estate, investments, bank accounts – both saving and checking accounts, stocks, bonds etc.,
• Your total liabilities that includes monthly bills, tax liens, existing loans and medical expenses.

4. Keep all the supporting documents such as bills along with your financial statement. You may have to dig deep and collect all the required papers. In that way, the information you provide in the financial worksheet will have proof. By doing so, you are not allowing any chance for the lender to doubt your statements. The more details you provide, the better are the chances of your home loan modification going through at an early date.

It is very essential that you provide truthful disclosures and verifiable documentary evidence to the attorneys for them to put up your case to the lenders.

Can I afford a Loan Modification?

There is no doubt that loan modification is an excellent option for the distress homeowners. It gives hope and ways to retain control over the home. The decision to go in for loan modification is not an easy one to take. However, it may appear to be the right thing to do, but there is no guarantee that it will solve your financial troubles. Loan modifications don’t always work out the same for every one. The best loan modification attorney may not be able to work his magic if your case is not suitable for it.

Always keep in mind that a loan modification is not only a way out but also an obligation. Here are a few things to think of if you are leaning towards a loan modification.

Eligibility

Do you meet the requirements of your lender? Each of them have different policies, but most want to know if you are employed and are having genuine financial difficulties. Simply put it tells the lender that you are not wholly responsible for falling back on payments and that loan modification will help you find your feet again. If you are not eligible for mortgage assistance and are unsteady, then they will not be of much help to you.

Missed payments

You need a strong case to convince your lender, but you can not be too far behind on your payments. It’s ok if you miss out on a couple of payments, because you lost a job, but it definitely sounds bad if you have missed payments due to bad expenditure habits. With a lot of pending loan you will come across as a high-risk case and the lender may not be too happy to work with you.

Affordability

Can you really afford to pay the cost of a loan modification? It may range from $2,000 to $5,000. If you’re financial condition is taut, can you afford to spend the last of your dollars for an application which may be rejected by the bank? Talk to your loan modification attorney and work out a budget so that you can plan the whole thing properly.

Equity value

Know your real worth. Your equity value is the single most important aspect which will affect your lender’s decision. It will work out better for your bank if they decide that you have enough equity to meet foreclosure expenses and deferred interest. Your equity value is simply the value of the property you hold, something your bank can easily over value. So it is entirely in your favor to know before hand exactly how much your property is worth.

Stay on track

Your financial troubles will not vanish with a loan modification. It will only make it a little easier to handle. Your attorney is not going to be there for you once the loan is modified. You will need to save enough money to be able to meet the initial payments one the mortgage reinstates. You will also need to have an emergency fund, so that you do not fall back on payments in case of unforeseen conditions. If you fall back on payment, the whole process would have been wasted.

Know your loan before opting for Loan Modification

Information is the tool and a weapon these days, which becomes even stronger when it is the correct information. For people undergoing or preparing to go for loan modification, being correctly informed about the process, rules and clauses will help in their favor. So first and foremost, do your homework well. While it is the lenders who will make the final call, being informed saves you a lot. Following mentioned are a few tips that might help you in the process of loan modification.

Know Your Rights

It is astonishing, yet true to know that almost 80% of the mortgage contracts are in violation of the lending laws. However, seldom are these noticed. Nevertheless, if you are informed of your rights, you can easily make these violations your weapon to secure the best loan modification deal. You can take help of your loan modification attorney in order to understand your rights and employ them to negotiate with the lender, while also delaying to stopping foreclosure altogether.

Act Fast

Foreclosure is the process that is extremely time sensitive. Even though it has been designed in a manner that provides the home owner some time to recover and stop the foreclosure from happening, too much delay in acting might get you in an irreversible fix. Therefore, as soon as you become aware that mortgage help is required, start the process for loan modification. Take help of a loan modification attorney to guide you through.

Work with your lawyer

Simply assigning the task to your loan modification attorney does not solve the purpose. While the attorney, money lender and broker can solve a lot of issues, you need to work with them in order to get the desired results. Provide your attorney with all the correct information about your financial situation and other required matters. Timely submission of the paperwork and your assistance to the attorney will help make the case stronger on your part.

Bankruptcy is not an option

There are times when people opt for bankruptcy as an option to save them out of the foreclosure. However, the bankruptcy only delays the process. Therefore, people end up rather with bankruptcy and foreclosure, both, on their records. It is not to say that bankruptcy is not an option at all. However, take advice from professionals and your financial consultant before moving in for this move.

Have a back-up plan ready

Many a times, people do not qualify for the loan modification. The reasons may be several such as a hard money lender, your finances falling beyond repair or maybe you do not need a loan modification at all. In such a scenario, always keep a secondary plan ready. Your loan modification attorney can help guide you through the same and find the best second viable option for you. Short sale, which calls for selling the house for price less than the market value, is one option where you can give the proceeds to your lender to pay off the mortgage. While you still lose your home here, your credit score does not deteriorate and you have a chance of bouncing back to your feet.

Know the facts from fictions

Loan modification has become a way where most people facing mortgage problems or foreclosures can walk in. Nevertheless, even as the popularity of loan mortgage grows, the myths regarding the same too are on a rise. In such a scenario, when people plagued with myths about loan modification gets working, they end up making wrong decisions. This guide here aims at helping you know the facts from fiction and thereby assist you in your bid for loan modification.

Myth #1: Do it yourself

While you actually can work on loan modification on your own, it will only take too long for any results, even as the results do not come out as satisfactory. For any bank, loss mitigation is one of the busiest departments, with one loss mitigation officer having to handle more than 800 cases at any time. In such a scenario, while getting personal attention is out of question, getting any attention at all becomes difficult. With a loan modification attorney working for you, you can get the solution worked up much easily and sooner. Your file travels faster on priority basis with the banks and you get personalized service at well.

Myth #2: Your lender wants to foreclose than modify the loan

According to a study, foreclosures lead to a substantial loss on the part of the money lender. In such a scenario, what with banks already owning a huge number of foreclosed properties and non-performing mortgages plaguing their books, any lender or bank will be willing to modify the loan for you. Therefore, ignore the intimidating threats of foreclosures. Instead, get working towards getting the loan modification.

Myth #3: Foreclosure process cannot be stopped

Even though foreclosure is a time sensitive process, you can work off till the auction actually takes place. A loan modification allows the process of foreclosure to be stopped as much as seven days before the auction. However, it does not mean that you delay the process of securing the loan modification. Early work will help you secure a better deal.

Myth #4: Loan modification will solve financial issues instantly
While loan modifications are a success in most cases, they require a lot of work, time and money. It may take you one to three months to get the loan modification process work for you depending on how much you were lagging behind. Nevertheless, the surety is that loan modification save you from losing your home. Good cooperation with lawyer and timely submitting of paperwork can further hasten the process.

Myth #5: You need good credit to qualify
While the requirements vary for each lender, the fact is that the bank should understand the financial sense of your loan modification. Credit rating does not affect this decision. Your lender might want to satisfy that you fell behind the schedule due to temporary issues and that you have it in you to bounce back. Thus, it is rather a job you need for loan modification more than a good credit score.

Myth #6: Loan Modification companies are scams
While there are unscrupulous people in all businesses, it is not hard to find legitimate institutions and organizations too. It is important, however, that you chose the firm that excels in the loan modification cases and has a very good experience behind to back it. Check the credentials carefully before deciding on the firm or attorney. Only a knowledgeable firm or attorney can make loan modification work for you in the best possible manner.

Write Your Senator Today!

• State Senator Contact Info

The following documentation will be required to start the loan modification negotiation process:

• Hardship Letter - Include dates, reason for delinquency, what you have done to attempt to workout problem in the past; also include any supporting documents for hardship. While our Network Service Reps will be happy to provide guidance if needed, the short and straightforward letter must be in your own words
• Bank Statements - Last two (4) months.
• Proof of Wages and Salary - Employed - Pay stubs for last two (2) months; Self-employed - 1040s for the last two (2) years.
• Federal Tax Returns - First an d second pages (W2s) from the last two (2) years.
• Rental Agreement - If the loan modification is not for your primary residence.
• Most recent mortgage statement
• Monthly Expense Sheet
• All expenses even if you are not paying them: including utilities, food, mortgage payments)