The loan modification buzz seems to have subsided as the government moves their attention to the Health Care Crisis. The “Making Home Affordable” program helps some but many others are left out. Default rates for home mortgages have increased significantly in the last quarter. Borrowers wait months to find out that they do not qualify for a modification, and they cannot understand why. Then they give up and end up in foreclosure.
If you are applying for a loan modification you need counseling. Few people realize there is more than one option for loan modification. As a consumer you need to understand your options, and be relentless in your pursuit.
There are a number of loan modification websites and call centers cropping up throughout the nation indicating the need for loan modifications is high. It also points to the fact that it is difficult to process a loan modification application.
Before enlisting the help of one of these types of companies make sure you ask them about their guarantees, and success rates. Make sure you read any agreements, and do not move forward unless you understand all of the terms. As with all services there are some good providers and some lousy ones. Most of the mortgage servicers have recorded messages that warn against loan modifications scams, and high fee loan modification companies. They also, state that individuals can do their own loan modification applications, and that is correct. The process is confusing and time consuming, so make sure you understand what you need to do to be successful.
I welcome your questions, and input about your experiences.
If you decide to tackle your loan modification application I have listed some tips in preparing your package:
- Make sure your hardship letter is compelling, and that it is clear that you intend on staying in your home. Let the lender know your home value so they can see the potential loss of a foreclosure.
- Be honest in your financial statement. The lender will only help if they know the modification will keep you in the home and keep you paying. Also, filing false financials is fraud and illegal.
- Make sure all documentation is legible and understandable. Your file will end up declined if the banks agent cannot make sense of the submission.
- Keep in touch with the bank on a weekly basis until you have a decision. If your request is denied ask the lender to send the file to the investor that owns the loan to see if they will modify the loan.
Finally, have a backup plan in case you are denied a loan modification. Other options include trying to sell your home and negotiate a settlement of the deficiency. The popular term is a short sale, and most lenders will entertain the option. Every short sale decision is determined using the seller’s financial information, and the current market value of the home. Timeframes for a decision can vary from a month to several months depending on the workload the bank is experiencing. Each approval is based on the individual merits of that account.
If all else fails contact the lender and ask if they will accept the deed in lieu of a foreclosure. As an alternative to foreclosure the lender might agree to accept the voluntary surrender of the deed to the property. It is a cost savings to the lender, and therefore less damaging to the homeowner in the long run.
I understand most of this information is generic, but the market keeps us from providing any more specific information. The constantly changing environment makes it impossible to provide any better insight.
I am very concerned about the issues our Military Families are experiencing with the housing crisis. Please call or email me if I can provide you assistance.
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