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Loan Modification Questions

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Top 10 Questions About Loan Modifications

The loan modification process can be frustrating and confusing for many distressed homeowners. If you are considering contacting your lender about a loan workout to avoid foreclosure, you need to get as much information up front as possible so you will be prepared to present your case in the best possible light.



To help you understand how the process works and what to expect, here are the

Top 10 Questions:

1. What exactly is a loan modification?

A loan modification is a permanent change in one or more terms of a borrower’s home loan, allowing the loan to be reinstated, and resulting in a lower payment the homeowner can afford.

2. Can the lender include late charges in the Loan Modification?

According to HUD (US Department of Housing and Urban Development), the accrued late charges should be waived by the lender at the time of the loan workout. This varies depending on the type of loan, but you should always request a complete breakdown and description of all fees and penalties from your lender.


3. Can the bank require an interior inspection of the property if they have concerns about its condition?

Yes, the lender may conduct any review it deems necessary to verify that the property does not have physical conditions which might adversely impact the value.


4. How do I know if I will qualify for a loan modification?

The number one criteria your lender is looking at is your ability to make the new modified payment now and in the future. You’ll need to supply the lender with proof of your income and a complete and accurate financial statement detailing your income and expenses, to show them that, if granted the modification, you will be able to afford the new, lower payment.

5. Do I have to be currently delinquent on my payments to get a loan modification?

Most lenders are now accepting applications from homeowners who are not currently delinquent, but who are able to prove to their bank that due to imminent interest rate increases or other factors, they will no longer be able to afford the loan payment under the terms of their loan. It is advisable to contact your lender as soon as possible to start the loan modification process, whether you are delinquent or not.

6. What is an acceptable Hardship situation?

Each homeowner has a unique set of circumstances that caused them to fall behind on their home loan, but generally the lenders consider divorce/separation, loss of income, death of spouse, co-borrower or family member issues, illness, job relocation, or military service to be acceptable reasons to consider a loan modification. A compelling hardship letter is a very important part of a successful application.

7. Will a loan modification help me stop foreclosure?

Yes, that is the goal. By working with your lender to find a loan workout solution, your loan is brought up-to-date and the foreclosure process is halted.

8. Can my missed payments be added back into my new loan modification?

Yes, the missed payments can be added to the new loan balance and spread out over the term to allow the loan to be brought up-to-date.

9. Can I apply for a loan modification myself, or should I pay someone to represent me?

That is entirely up to you and your comfort level in dealing with your lender. There is also a financial consideration…most loan modification companies require a substantial up front fee. Whatever you decide, the first thing you should do is to learn all you can about the process, your legal rights, and what it takes to get your application approved.

10. So how do I get started to modify my loan?

Before contacting your bank’s loss mitigation department or a loan modification company, do your homework. Learn as much as you can about the loan modification process, so you can make informed decisions.

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We can help you stop foreclosure with a loan modification in the following states:

If you need help understanding your option of taking advantage of the home loan modification process, the help is available to you everywhere. The process is quite tricky and it is highly recommended that you do indeed seek legal advice before signing on the dotted line, in order receive the most efficient and cost-effective modification to your mortgage payment.

Where do I get Advice
There is advice all over the web on how to receive a loan modification; some of this advice is quite helpful, while some is quite dreadful. There is also the opportunity to hire a professional service that will help you go through the paperwork and work with the lender to help you get all the benefits that you deserve, due to a hardship. Loan modification is a process that must be understood completely and thoroughly. This article can actually offer you an insight on the process of loan modification and tips that will better help you as a homeowner save your home from the risk of a foreclosure.

Loan Modification Advice
First and foremost, it is important to determine if you are eligible for a loan modification. This requires writing a letter of hardship explaining to the lender what exactly the reason is for your late payments and the fact that you are unable to pay your mortgage. Doing a loan modification on your own requires more than just advice. Becoming educated about the process is more important. This is perhaps a good reason to hire a professional loan modification company to take part in the process. They will handle everything for you, while educating you in the progression. There is a fee charged for hiring these companies, but in turn your mortgage payment can be lowered quite a bit and professionals can even find things in your original loan papers that may prove that the lender may have broken the law during your original mortgage signing.

If you do choose to take the big leap of the loan modification process on your own, you must first contact the lender and they will lead you to the correct department, normally the loss mitigation department. You may not want to directly say that you are in the process foreclosure. We do not want the lender to think your situation is not worth their time before hearing you out. Always document anything relating to the loan modification process, every phone call and any other information you may receive during the process must be documented. Always discuss every option available with your lender, so that you may come up with the best alternative for you. It is true you will save money going directly through your lender and let’s face it, you are struggling already trying to make your payments, but professional assistance can help immensely.

No matter what direction you decide to take, loan modification will be what determines the amount of time you have in your home. If you are eligible you should act as soon as possible.



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