Answers to the Top 8 Loan Modification Questions
Loan modification has been made possible through the Making Home Affordable Act passed by President Obama and Congress. The modification program is designed to help distressed homeowners avoid foreclosure. In order to be approved for a loan modification, you must meet the guidelines of the program. Understanding the guidelines will help you prepare and give you the best chance of being approved for a modification.
If you have questions about home loan modifications, you aren’t alone. These are the most commonly asked questions about the program:
What is loan modification?
A loan modification is a change in the terms of a mortgage, which allows the loan to be brought current and creates a lower monthly payment, which is more affordable based on the income of the homeowner.
How do I find out if I qualify for a modification of my home mortgage?
Financial hardship and ability to pay the new mortgage amount are the main criteria used to determine eligibility for the program. In order to be approved for a loan modification, you will need to show proof of income, financial information about your expenses and information about changes in your situation, which make it impossible to meet the original loan payment such as a reduction in income or an increase in expenses.
What constitutes a hardship for the purposes of loan modification?
There are a variety of situations that qualify under Making Home Affordable. Some of the most common include loss of income, reduction in income, divorce, death of a spouse, military service and an increase in expenses, such as an adjustable rate mortgage that results in a large increase in the monthly payment or other changes in expenses. The application requires a hardship letter that explains in detail your situation.
Can this program help avoid foreclosure?
Yes, the goal of the program is to bring home loans current and reinstate the loans in order to assist homeowners in avoiding foreclosure.
What if I’m not behind in my mortgage payments?
The Making Home Affordable Act has a provision that provides incentives to reach out to borrowers who are at risk of falling behind in the future in order to provide help before the loan is in default.
Are late charges or other fees incurred with a loan modification?
No, the Making Home Affordable Act requires that lenders waive late fees and other charges related to the loan being modified.
How does the federal program work and are there incentives for lenders to participate in the program?
The government has allocated funds to be used to help subsidize lenders and homeowners can get a credit towards their mortgage balance by making payments on time.
Should I apply for the loan modification myself or use a company offering loan modification services?
The choice is yours to make. Some people feel comfortable with the process and choose to complete the loan modification application process on their own, while others prefer professional loan modification services to help them prepare the most compelling application package possible and guide them through the process.
If you want professional help with the process of applying for a modification, Integrity First offers professional loan modification services. Browse our website to learn more about our company and financial services and contact us for assistance with your loan.