13 Jan Understanding Mortgage Loan Modifications
One of the most favorable options to fight foreclosure is a loan modification. Loan modifications are a permanent restructuring of a mortgage where one or more terms of a loan are changed to provide a more affordable payment. Homeowners that are struggling to pay their mortgages will benefit the most from a loan modification and they can offer significant relief by lowering monthly payments. However, as with any financial process, loan modifications can be confusing, require extensive paperwork and are not guaranteed to be approved.
As we mentioned above, loan modifications can help lower your monthly mortgage payment. Depending on your lender, they can also do much more. Together with lowering your payments, your lender may also agree to one or a combination of the following:
- Reduce your interest rate
- Change your loan from a variable interest rate to a fixed interest rate
- Extend the length of the term of your loan
However, obtaining a loan modification is not a simple process. In order to be eligible for a modification a borrower must generally:
- Prove they cannot afford their current mortgage payment due to financial hardship
- Complete a trial period that demonstrates they can afford the new amount
- Provide all the documentation required by their lender for evaluation, such as proof of income, tax returns, bank statements, and a hardship statement.
Because of their complexity, retaining the services of an attorney is the safest option when attempting to obtain a loan modification from your lender. In fact, lenders may prefer that you apply without legal representation. Given their intricacies and legalese, proceeding through a loan modification alone increases your chances of making a mistake and may lead you to agree to something you don’t fully understand. Experienced attorneys can protect your rights and help guide you through the modification process. More importantly, they can evaluate your situation and advise you on the probabilities that your modification is approved.
If you are eligible, an attorney can help you collect all of the necessary documentation, prepare your modification package, and negotiate terms of your modification with your lender. If you don’t qualify for a loan modification, an attorney can provide you with additional options to save your home.
Ultimately, whether you pursue a loan modification on your own or choose to retain the services of an attorney, it is important to keep a few things in mind to better your chances of being approved. First, you want to fully and correctly complete the modification package. You also want to make sure you ask questions so that you know exactly what your servicer is asking for. Finally, stay in touch with your lender or attorney. Show them that you are fully committed and invested in making sure the loan modification benefits all parties.
As one of the leading foreclosure defense firms in the California, we have negotiated countless loan modifications on behalf of our clients. Our attorneys understand what it takes to build a successful loan modification package and are eager to answer any questions you may have. To schedule a FREE consultation with one of our attorneys please contact our firm at (888) 417-1080.
RA & Associates, APC
1 (888) 417-1080
505 N. Brand Blvd.
Glendale, CA 91203