 Loan
Modification
What
Is A Loan Modification?
A loan
modification is basically a change to one or more terms of your
mortgage loan, resulting from the change in the interest rate,
reduction of monthly payment amount and/or the duration of the
loan.
What Is The
Purpose Of Loan Modification?
The purpose of loan
modification is to make monthly mortgage payments affordable for
people who have fallen behind on their payments. Loan
modification prevents
foreclosure and allows homeowners to save
their homes!
What Does It Mean To Have Loan Modified Under HAMP?
Making Home
Affordable Program (HAMP) is a government program designed to
help many distressed homeowners by avoiding
foreclosure and
modifying the terms of the original loan. If the home in
foreclosure is your primary residence and the amount of your
first mortgage does not exceed $729,750.00, you may qualify for HAMP (click on the links below for eligibility requirements and
to find out if you qualify for HAMP). Under HAMP, your new monthly payments would be
equivalent to 31% of your gross (pre-tax) monthly income. If the
servicer cannot reduce your monthly payments to the target 31%,
modification cannot be completed under HAMP.
HAMP uses a
3-step process (modification waterfall) in trying to reduce
monthly payments:
Step 1: if
necessary, reduce the interest rate to 2%,
Step 2: if
necessary, extend the term to 40 years,
Step 3: if
necessary, forbear, or defer a certain percentage of the unpaid
principal balance until either the borrower sells or transfers
the property or the mortgage loan becomes mature (typically, in
40 years).
Click
here to
access all the forms necessary to apply for HAMP.
Click
here to
check if you eligible for HAMP.
Click
here to
view the checklist for income verification.
Click
here to
view the checklist for FHA-HAMP (for FHA borrowers only).
What Is A Traditional
Modification?
Traditional modification
refers to a lender's or servicer's internal or "in-house"
modification. Where a homeowner does not meet the eligibility
requirements under HAMP, traditional modification can provide a
solution. Traditional modification is different for each
servicer. What generally remains the same is that the bank looks
at the borrower's net income, as opposed to gross income
(required by HAMP). It is important that the homeowner's
expenses are lower than the net household income. The bank will
require a submission of a financial package in order to verify
household income and expenses.
Please
Note: If you have an FHA loan and you are more
than twelve (12) months overdue on your mortgage payments,
traditional loan modification may be your best option.
Why Do You Need An
Experienced Attorney To Help With Loan Modification?
The purpose of
a loan modification is to make your mortgage payment
affordable so you could stay in your home. There are
different types of loan modifications that may be suitable
for you. Only an
experienced attorney knows what type of
loan modification is more suitable for you. By having an
experienced attorney negotiate the loan modification for
you, you may be able to accomplish:
• A
change in the terms of your loan to make it more
affordable
• A change in your mortgage from an adjustable rate to a
fixed rate
• A change in the length of the loan
• An extension of payments
• Waiver of accrued interest
• Bringing your mortgage payments current
• Reducing your loan balance
Loan
modification is a tedious process that could be very draining
to those who are unfamiliar with it. The bank requires a
submission of multiple forms and financial documents, which
are used to verify the borrower's income, hardship, credit
history, owner occupancy, etc. The way these documents are
prepared to the very tee will play a role as to whether you
could qualify for a loan modification. Likewise, only an
experienced attorney will know the formula that banks use in
verifying the household income.
To accomplish
the desired results, it is necessary that
an experienced attorney reviews, prepares, and submits all
documents. The package submitted to the lender must be
complete and the follow ups with the bank must be constant
in order to render a positive outcome. While it may seem
like a simple process, it may take years for those who have
not dealt with it before.
Call our firm today
at 718-444-1115 and our
experienced staff will provide the utmost attention to your case to deliver the best outcome for you! |
