What is a loan modification?
Whether you call it a loan modification, mortgage modification, restructuring, or a workout plan it can all seem very confusing. A loan modification is when a borrower – who is facing financial hardship and is having difficulty making their mortgage payments,
an attorney would work with your lender to reduce the monthly payments and change the terms of your mortgage.
A large number of homeowners will use loan modification to prevent getting into difficulty or even foreclosure on their home.
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Who is eligible for a loan modification?
According to the Department of Treasury: “Anyone with high combined mortgage debt compared to income or who is “underwater” (with a combined mortgage balance higher than the current market value of his house) may be eligible for a loan modification. This initiative will also include borrowers who show other indications of being at risk of default. Eligibility for the program will sunset at the end of three years.”
Forensic Loan Audit
We include a forensic audit of all closing documents, This service includes a review all loan documents and perform a thorough investigation for miscalculations and to determine if the loan terms are accurate, truthful, and met the requirements of the applicable federal statutes.
Loan Audits
Truth-In-Lending Act (TILA) Violations – Inaccurate reporting of APR and finance charge calculations on borrower disclosures. Calculation errors often occur as a result of failing to include one or more prepaid finance charges in the calculations, incorrect disclosed funding dates, or last-minute changes made to the loan by the settlement agent at the closing table. If understated, the lender is in violation of the federal Truth-In-Lending Act as well as many state laws prohibiting such actions. Lender required to reimburse borrower for the difference, and may be subject to statutory damages, administrative sanctions, loan buy-backs, and lawsuits. In addition, the rescission period may reopen, creating additional risk for the lender.
Foreclosure Prevention
Ways to Stop Foreclosure
The first step to stop foreclosure is to contact the lender, explain your difficulties, don’t avoid any calls or correspondence.
Terms explained
Loan Workout – A loan workout is when we negotiate with your lender any kind of plan that will benefit both you and the lender, This is a broad term used in the industry to cover the different options you may have such as a loan modification, repayment plan, short sale, forbearance plan etc.
Loan Modification – This is when the lender modifies your current mortgage in order to work with you and make your mortgage more affordable. In the past this was only used when a borrower was in arrears, but now this is not necessary.
Forbearance – This is used most of the time, when a Notice of Default has been issued. It may be agreed to delay or reduce payments for a short period, with the understanding that another option will be used at the close of that time to bring your account more current, Your lender, may then temporarily cease legal action.
Short Sale – This is used if a modification cannot be agreed, the lender agrees to accept less than is owed in the sale and take a loss. You place the home for sale and any offers are presented to the bank.
Deed-in-lieu – is a deed instrument in which the borrower agrees to hand over the property to the lender, without legal action being required, if both parties are in agreement.
How do I know that I qualify??
Your application is reviewed by an Attorney prior to acceptance.
How long does the process take?
Loan modifications on average take 90-120 days, depending on the lender.
Do I need to be behind on my mortgage payments to be eligible for a Home Loan Modification?
No. Responsible borrowers who are struggling to remain current on their mortgage payments are eligible if they are at risk of imminent default, for example, because their mortgage payment has recently increased to a level that is not affordable. If you have had or anticipate a significant increase in your mortgage payment or you have had a significant reduction in income or have experienced some other hardship that makes you unable to pay your mortgage, contact your servicer. You will be required to document your income and expenses and provide evidence of the hardship or change in your circumstances.
Does loan modification hurt your credit?
Mortgage modification doesn’t hurt your credit, in itself, In fact, it’ll help restore your credit when you start making payments as per the modified terms and conditions. As long as there aren’t any late payments or default under a modification program, your credit will be fine.
