What is Loan Modification?

It is the process by which a bank Rules and Data regulations a series of mortgage loans. It is the process by which the bank deals with issues of foreclosure in the following ways. Liquidating a borrower’s non-exempt real property (if any is present)

Reconveyancing and New-Forming of Loans

How does this process work?

During the modification process bank goes over all the borrower’s single copy of their loan schedules, critical loan documents as well as all non-disutable data in the file then they look closely at all the details in the rehabilitation plans.

They document period of modification, that is, how many months will be before borrower can pay back the new loan.

What information is required from the borrower?

Much of the information that the bank requires will be based upon the monthly payment of borrower, For example, is the credit report of borrower, what the credit score is of borrower, amount of unique monthly credit on the line of the borrower.

What is the purpose of loan modification?

The purpose of the modification is to get a new term of repayment for a borrower.

Is there any kind of record kept on modification?

Yes, the modification is kept in a database, but just the data, the history of the modification.

Is there any kind of difference betweenthe loan modification?

Yes, that is there are some peoples that can be documented. That is, if the client has gone through foreclosure they may have a HAMP (Home Affordable Modification Program) attached to their loan or HAMP be part of their federal loan.

What information we need to give to the bank?

For example, if a borrower has paid down the principal on his mortgage it can’t be documented at the financial institution, so if the bank has a document showing that there is a balloon payment due it’s not going to be put in the loan modification package. Some banks also require that $1,000 be applied to principal, if that is not the case you will be required to supply supplemental paperwork or go back to the original loan.

Can we change how we pay?

Yes, the bank will allow you to make an interest only payment on your loan, if you are in a restructured payment you can ask the bank to do so.

What can we claim as exempt?

A borrower can claim certain items in a loan modification as exempt if it is taken by, for example, a first time homebuyer who doesn’t own a home within the last three years of HAMP (Home Affordable Modification Program) program. That time limit can be extended if you have been previously delinquent in payments, home for which was manufactured after December 31, 1993 etc.

Do we have to list all the costs?

No. If you are unable to supply all the costs you can add a letter with all the estimated repayment.

How long can we wait for final approval?

Generally, the vast majority of changes can be made without waiting for the entire approval.

Should we hire someone to help just in case?

No, a borrower is not obligated to hire someone to help, if he wants to hire someone just for processing the forms and for interview purposes, he can use the same materials when he submits as well.

How much will a borrower owe for everything?

Debt re-amortization will not count because it is not part of the loan modification program. Debt refinancing is.

Can my lender ever take me to court?

No, unless the transactions were done dishonestly or illegally and the bank didn’t receive a proper offer in compromise.

What kinds of changes are we allowed to make?

The type of homes we can modify determine how much can be reduced for what time period, mortgage amount etc. If you don’t ask the bank what they need they can’t tell you, but if they do ask you can offer as many ideas as you can think of.

They can modify loans for one, two, three, four, five, six, seven, eight or more of the following reasons: fixed rate, interest only, behind on payments, principal balance, early pay offs, foreclosure or bankruptcy.

What if I still cannot afford the payments after modifications?

Borrower also has the right to have the right of the bank or loan institution to return the collateral, if the bank decides to do so.

Here are some of the many reasons why they can stay in the program.

A hardship had occurred that prevented them to work, you are looking forward to complete the modification process at the beginning of the loan period and were not able to complete it, job was lost, you divorce settlement was not approved.