Monday, December 15, 2014

Loan Modification Guidelines and Considerations


What goes up, must come down, so it's no surprise that the housing bubble has finally burst. Many home owners that bought during the skyrocketing real estate boom are now paying the piper with upside down mortgages, little to no equity, and a rising monthly payment that's spiraling out of control. Reaching epidemic proportions, millions of distressed borrowers have turned to one of the best foreclosure remedies when applying for a loan modification to cut the monthly mortgage payments down to size.

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Although not every distressed borrower is eligible for a loan modification, the program is designed to aid and assist those who truly need it. The home owners must be able to verify that they are no longer able to meet their monthly mortgage, and in most cases, through no fault of their own.

A qualified loan modification applicant will submit a letter of hardship to their lender, explaining their unique situation and financial circumstances. The borrower may have lost a job, had their salary cut back, suffered a medical crisis, was incarcerated, underwent a divorce, death of a person on the title, or was subject to a bad loan that has increased the monthly mortgage beyond their ability to pay.

The loan modification professional will also ask you for your bank statements, verification of income, and a list of all your expenses and other debts. From this careful analysis of the total monthly income versus the total monthly payout, a newly structured mortgage may be created by the existing lender or sold to a lending competitor.

If you are behind in your mortgage payments or believe you will be late, you should begin investigation into applying for a loan modification to save your property from foreclosure. Three consecutive missed payments will start the ball rolling with a Notice Of Default, so time is of the essence to contact a loan broker or loss mitigation specialist with your lending institution.

Although the key factor to a successful loan modification claim is that the borrower is suffering a financial hardship, there are some instances when the home owner may not be able to retain the property. Income reduction or temporary income loss is acceptable, however, be aware that you must demonstrate an ability to re-pay the newly restructured loan. Persons who have been out of work for more than a year or are relying on government substances may not qualify for the new loan, and therefore should seek another alternative as a foreclosure remedy. Placing the property on a short sale may be the ideal situation for those who have more than three months before the home goes into default and who are willing to sell the property at a rock bottom price for a quick sale.


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