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An Intro To Loan Modification
If you are currently experiencing or even anticipating significant personal financial difficulties that have caused or could cause you to miss mortgage payments, what are some of the options you could consider?
<> Selling your property on the open market;
<> Applying for a lender approved short sale;
<> Filing for personal bankruptcy;
<> Doing nothing and allowing your lender(s) to foreclose on your home; or,
<> Pursuing a Loan Modification
A Loan Modification can serve as a mutually beneficial way to avoid foreclosure,
Besides stopping foreclosure, a Loan Modification can help you avoid personal bankruptcy.
A Loan Modification can provide the means to keep you from having to sell, give up, or otherwise lose your home.
QUESTION: Could I possibly get a Loan Modification even if I’m already in foreclosure or if I’ve been notified that foreclosure has been started?
ANSWER: YES. If you can clearly represent to your lender(s) that you have a sensible plan for ensuring you can faithfully make the monthly payments on a loan with more favorable terms, it’s possible for you to have a Loan Modification approved.
QUESTION: Do I have to already be delinquent with my mortgage payments to apply for or get a Loan Modification?
ANSWER: NO. Lenders actually prefer to know in advance if you believe a mortgage payment is going to be missed, but it is possible, at least with some lenders, to arrange a Loan Modification even if you haven’t missed any payments yet. Nevertheless, it has been reported that one large lender claims it won't even look at a proposed Loan Modification unless and until payments have been missed!
QUESTION: Will my lender consent to refinancing my home if there’s no longer any equity in my property?
ANSWER: A Loan Modification is not a traditional refinancing of your property, and it therefore does not require that equity exists.
QUESTION: Don’t I need to have a high credit score and a flawless credit history before my lender(s) will agree to even working with me on a Loan Modification? If I have damaged credit due to late payments that have already occurred, is there any hope for me?
ANSWER: Your credit score doesn't even factor into your getting a Loan Modification approved like it does in a traditional refinancing. Loan Modifications are designed for people who have already missed payments but who nevertheless want to keep their home. Perhaps the monthly payments on your adjustable rate mortgage have escalated, or you’ve lost a job and income. Maybe you had a temporary hardship that caused you to miss a payment or two, but it has since passed, yet you just can’t seem to catch up with those delinquent payments and make your current payments, too. A Loan Modification could provide the means for you to catch up and keep up if you can show your lender why and how you will.
QUESTION: If I have a first and a second mortgage on my home, could I still get a Loan Modification?
ANSWER: YES. It may be possible to have your first and second mortgage loans combined into one revised loan. A lender might even waive a second mortgage in order to secure timely, faithful payments on the revised loan and thereby avoid the costly and lengthy foreclosure process.
QUESTION: I’ve missed payments already; so, what happens to the late charges that have accrued if I get a Loan Modification?
ANSWER: It is likely a lender will agree to waive existing late charges as part of their approval of the Loan Modification.
QUESTION: If I am currently unemployed, but my spouse is working, and only my name is on the mortgage loan, can I still get a Loan Modification?
ANSWER: Your lender would be expected to scrutinize your overall situation, and consider things like how much is in arrears or delinquent on your existing loan, if the current income of your spouse could pay for a modified loan even if it couldn’t pay for existing arrearage, and perhaps other issues, in order to decide whether or not to approve modification of a loan your spouse is not on. Some lenders have been known to accept various forms of proveable income, including monetary contributions from family members for example, to approve a Loan Modification.
QUESTION: Could a Loan Modification include the need for me to pay upfront amounts to be escrowed for expenses like Homeowner’s Association Dues or property taxes?
ANSWER: Like original mortgage loans or traditional refinancing, a Loan Modification could involve the payment of funds into escrow for those expenses that could cause a lien to be placed upon the property if they weren’t paid and which would take precedence over (be positioned ahead of) payments associated with an FHA-insured mortgage. Your lender would be expected to make those known to you prior to approving your Loan Modification.
Some of the things you might consider in the event you are unable to get a Loan Modification approved could include:
<> Obtaining a traditional refinance into a new mortgage loan if it is possible;
<> Having Veterans Realty assist you with a “short sale” of your property;
<> Finding out if a qualified buyer could assume your existing mortgage loan(s);
<> Renting your home to someone who will pay you enough rent to cover your existing monthly expenses; or,
<> Finding a roommate to live in your house with you and also share in the monthly expenses with you.
You might even consider a deed in lieu of foreclosure as a last resort, meaning you would voluntarily turn over the ownership of your home to your lender in exchange for having your outstanding debt forgiven. You would lose your home but your credit rating might be damaged less than if foreclosure occurred.
Things to consider about exercising this option include:
<> You will likely have to try and sell your property on the open market for its fair market value for at least three months before your lender will consider taking the property off your hands;
<> You may not be eligible to use this option if you have other outstanding liens (i.e., taxes, Homeowner’s Association Fees, etc.), creditor judgments or delinquent second mortgage loans against your property; and,
<> This option does damage your credit rating and can negatively affect it for four or more years.
QUESTION: How can Veterans Realty help me?
ANSWER: Veterans Realty’s Certified Loan Modification Specialist can provide you the proper forms to complete and can consult with you on completing them so development of your Loan Modification Application Package can get underway. Most of what you will need to provide will be simple facts pertaining to your financial status and information about the hardship
A Loan Modification Application Package must be thorough, complete and accurate so a formal Loan Modification Proposal can be developed and added to the package for your lender's consideration. The finalized Loan Modification Application & Proposal Package must be properly formatted in order to qualify it for consideration and timely processing by your lender. Although you can attempt to develop your own Loan Modification Application Package and create your own Loan Modification Proposal, Veterans Realty recommends having it done professionally because it's critical to getting your Loan Modification approved.
Two other services we recommend are: (1) An attorney's review of your Loan Modification Application & Proposal Package prior to its submission to your lender; and, (2) Professional negotiations with your lender (yes, Loan Modification Proposals normally do have to be negotiated) by experienced and skilled negotiators to pursue those modified loan terms and conditions that are most favorable to you. Veterans Realty can arrange through its professional Loan Modification Network to have these services made available to you, typically for less than you'd pay to have a traditional mortgage loan refinancing done on your home.
WARNING: As with many personal financial issues these days (i.e., credit repair, foreclosure avoidance, mortgage loan refinancing, loan modification, etc.), there are a lot of scam artists out there who are using the Internet and other means to lure customers seeking financial assistance and a lot of these "no gooders" are requiring the payment of upfront fees (sometimes called "application fees") for their services, often without even informing you why the fees are necessary or what they're intended for. The "scammers" represent themselves as legitimate and professional, but many of them fail to produce even a little of what it was they were paid in advance for. So, BE CAREFUL, ASK QUESTIONS, AND GET ANSWERS TO YOUR QUESTIONS.
Veterans Realty charges NO UPFRONT FEES for the Loan Modification services we provide, something that's clearly stated in our Service Contract.
For more information or assistance, call or e-mail this Certified Loan Modification Specialist*:
Dwight “Dee-Jay” Hayes, Ph.D., Realtor®, CLMS
President & Principal Broker
Veterans Realty Incorporated
Tel: (808) 625-1991 or (808) 277-6595
E-mail: OahuProperties@aol.com
* A copy of the Harris Real Estate University Certified Loan Modification Specialist certificate is available via e-mail upon request.
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