Loan Modification
Explore Loan Workout Solutions with Your Lender
Most importantly, if you can keep your mortgage current, do so. But if you can’t and find yourself consistently falling behind in your mortgage payments, you might qualify for a loan workout option. Check with your lender to see which option may be available. Some options may not apply to your loan if it is not insured by FHA. In most cases we have found difficulty and frustration in dealing directly with your lender. There are many loan modification companies and law offices providing loan modifications trying to help home owners struggling with their mortgage as well. While some of these companies may mean well others may be praying on home owners behind in their mortgage payments. It is always a good idea to use a loan modification law office that has attorneys experienced with loan workouts. Many mortgage and real estate brokers are trying to market loan modification services by mailers and telemarketing. Do not use these companies. They will use terminology such as “attorney backed”, “attorney based” or “attorney assisted”. These are not your attorneys and they are ONLY there to lend credibility. Properly check their credentials along with their BBB rating or visit www.loanmodificationhelpcenter.org <http://www.loanmodificationhelpcenter.org/> and check out the loan modification reviews section.
If your problem is temporary - call your lender to discuss these Possibilities:
Reinstatement: A common option for someone behind in their mortgage payments less than 90 days. Your lender is always willing to discuss accepting the total amount owed in a lump sum by a specific date. Forbearance is always an option but unfortunately usually an unaffordable solution. In most cases an attorney can negotiate the past due amounts or has them put to the end of the loan allowing a reinstatement to work long term.
Forbearance: This is the most common solution for many lenders. Your lender may allow you to reduce or suspend payments for a short period of time and then agree to another option to bring your loan current. A forbearance option is often combined with a reinstatement when you know you will have enough money to bring the account current at a specific time. Most borrowers have difficulties meeting forbearance plans even though additional money may come from a bonus, sale of another property or tax refund. By the time a borrower is facing foreclosure they need an experienced negotiator to deal with their lender. We have heard of nightmares with struggling home owners trying to negotiate a forbearance agreement on their own. A loan modification attorney can usually negotiate a true loan modification if their client qualifies.
Repayment plan: This option almost never works for the consumer. You may be able to get an agreement to resume making your regular monthly payments, plus a portion of the past due payments each month until you are caught up.
If it appears that your situation is long-term or will permanently affect your ability to bring your account current - call your lender to discuss options:
Mortgage modification: If you can make payments on your loan, but don't have enough money to bring your account current or you can't afford your current payment, your lender may be able to change the terms of your original loan to make the payments more affordable. In most cases your lender will want to give up as little as possible depending on who is holding the note. Investors make these decisions typically for the mortgage servicing companies’ bases on their portfolios. Your loan could be permanently changed in one or more of the following ways:
Adding the missed payments to the existing loan balance and keeping the interest rate and mortgage payments the same.
By lowering the interest rate on the mortgage and possibly making an adjustable rate into a fixed rate.
Extending the number of years you have to repay, in some cases as much 20 years.
Partial Claim: If your mortgage is insured, your lender might help you get a one-time interest-free loan from your mortgage guarantor to bring your account current. You may be allowed to wait several years before repaying this loan. You qualify for an FHA partial claim if:
Your loan is between 4 and 12 months delinquent.
You are able to begin making full mortgage payments again.
When your lender files a partial claim, HUD will pay your lender the amount necessary to bring your mortgage current. You must sign a promissory note, and a lien will be placed on your property until the promissory note is paid in full. This option is uncommon these days as most will not qualify.
The promissory note is interest-free and is due when you pay off the first mortgage or when you sell the property.
We spoke to various attorneys providing loan modifications over the past year and found tremendous results with some. We also found many unscrupulous companies that have developed loan modification scams. Some important things to remember when doing a loan modification with your lender is to use a Law office where you can speak with the attorney and or visit their office. While most of the attorneys handling these matters are in California you can find them in your state as well. Mr. Steven C. Feldman with the Feldman Law Center and Mr. Pavia are two of the original attorneys providing loan modifications and working successfully with lenders. Mr. Feldman is a consumer advocate that is responsible for going after unlicensed loan modification companies in an effort to help troubled homeowners. You can find the Feldman Law Center at www.feldmanlawcenter.com <http://www.feldmanlawcenter.com/> . For more information call the Loan Modification Help Center at 1-800-359-6941
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