By 
- Do you owe more than your house is worth?
- Has your rate been adjusted so high that you can’t make your monthly payments?
- Have you received calls or emails offering you loan modification services?
This article explains who qualifies for a loan modification. It describes what can be negotiated with the lender and provides advice on how to decide whether to pursue a loan modification alone or hire an expert.
Should you hire someone to help you with your loan modification?
The answer is maybe, maybe not. Before you hire a company to trade on your behalf, understand that you can trade on your own. There is no “magic” that lawyers, mortgage brokers or anyone else can bring to a loan modification negotiation. Homeowners can take advantage of the free information available from HUD and the California Department of Real Estate and try to negotiate a loan modification on their own. A lawyer or broker can contact you on your behalf and try to negotiate a loan modification, just like you can. California recently enacted Senate Bill 94 prohibiting upfront fees for residential loan modification services. As a result, most loan modification providers have stopped offering services.
Should a homeowner use an attorney or company that ‘specializes’ in loan modification?
Homeowners behind on their mortgage payments are often contacted by individuals or companies offering to help resolve a loan modification. But California law now prohibits anyone from accepting advance payments. Any person or business seeking up-front fees is breaking the law now that SB 94 has been filed. The loan modification industry was plagued with deceptive practices. Numerous businesses in California tried to take advantage of desperate homeowners by offering to help save their homes. Many overpromise and underdeliver. Brokers cannot provide legal advice and may have no more knowledge of real estate law than a homeowner can obtain from HUD and the California Department of Real Estate.
What can a lawyer do that a homeowner can’t do for themselves?
The lawyer can review the loan for legal flaws that could be used as bargaining chips with the lender, but the most important thing a lawyer can do is act as an unemotional advocate and try to persuade the lender that the loan modification is right. the best interests of the lender. both parties. In other words, the lender will make more money by accepting the loan modification than by foreclosing on the property. Most attorneys prepare a report that outlines the homeowner’s financial situation and describes why a loan modification makes sense for both the homeowner and the lender.
What can be negotiated with the lender?
Reinstatement – Your lender may allow you to pay the full amount you are past due, in a single payment, on a specific date. This is often coupled with leniency when you can show that funds from a bond, tax refund, or other source will be available at a specific time in the future.
Forbearance: Your lender may offer a temporary reduction or suspension of your mortgage payments while you recover. Forbearance is often combined with a reinstatement or payment plan to pay off late or reduced mortgage payments.
Payment Plan: This is an agreement that gives you a set amount of time to pay the amount that is past due by combining a portion of what is past due with your regular monthly payment. At the end of the payment period, you have gradually paid off the amount of your mortgage that was delinquent.
Changes to Loan Terms: This is a written agreement between you and your mortgage company that permanently changes one or more of the original terms of your promissory note to make payments more affordable. This is the goal of most homeowners in trouble with home loans. A loan modification agreement changes the terms of your loan: a lower interest rate, an extension of the life of the loan, the conversion of an adjustable rate loan to a fixed rate loan can be effected.
What are the problems with loan modification?
Many people will not qualify. Good candidates are homeowners who have a demonstrable reason for being late, such as a change in their income or loan amount, and can show they have enough income to make the payments if the terms of the loan are changed . The mortgage business is a business. A loan holder will not consider modifying a loan unless the homeowner can afford to make the new payments. If the landlord is current and pays on time, it is unlikely that he will get a modification. Loan servicers are less likely to negotiate than banks because they often lack the power to modify loans.
If you’re considering a loan modification, check out all the free information available. Think hard about trying to do it yourself. If you decide to seek help, a qualified attorney can explain the law, review your situation, and guide you to the most appropriate options.