Can A Loan Modification Help Me?

If you’re in danger of losing your home to foreclosure, a loan modification may be your last hope of saving it. Can you get a loan modification? Loan modifications aren’t always easy to get, but they’re certainly possible. If you need a loan modification, the sooner you contact a lawyer to guide you through the process, the better.

To qualify for a loan modification, you need to show that a financial hardship has affected your ability to make your mortgage payments. To qualify for a loan modification under HAMP, you must demonstrate financial hardship; your mortgage must date from on or before January 1, 2009; you must owe less than $729,750 on your primary residence (larger amounts are admissible on multi-unit rental properties); the property must not have been condemned; you have enough money to make modified payments; and you must not have been convicted of a major crime in the past ten years.

A loan modification translates to lower interest rates, a possible extended payback period, and possible forgiveness of a portion of the loan. A loan modification is structured to be sustainable for the homeowner. According to the government’s guidelines for the Home Affordable Modification Plan, a loan is sustainable if the monthly payment is thirty-one percent of the monthly before-tax income.

The process can be frustrating and approval is far from a sure thing. The approval rates in 2013, according to Bloomberg, were:

Nationstar – 22% approved

CitiMortgage – 43%

Bank of America – 45%

JPMorgan Chase & Co. – 30%

Ocwen Loan Servicing – 24%

What can you do to improve your chances? The application has a huge effect on whether or not your modification will be approved. The application needs to include a hardship letter, a budget, proof of income such as paycheck stubs, and possibly other financial documents.

It’s important that all documents are present and current. Be sure you know what you need to provide, and make extra copies. There are many stories of documents getting lost, and keeping extra copies of everything never hurts. Writing down the details of conversations and dating everything are also helpful.

Keep in touch. Call the lender every week. This is a good opportunity to clarify that there aren’t any misunderstandings. And keep notes!

A loan modification can make a big difference.

A joint report from the Office of the Comptroller of the Currency and the Office of Thrift Supervision found that successful HAMP modifications in the second quarter of 2010 gave borrowers an average monthly payment reduction of $608, while private loan modifications lowered payments by an average of $307.

If you need further information about loan modification, or would like to begin the process, please contact us today!