Do your own loan modification without paying a high fee to outside companies and lawyers. If you are having trouble paying your mortgage, have an adjustable rate or your value is upside down, it is possible to renegotiate your loan terms. But be prepared to fight a long an difficult battle and realize it’s one you many not win and even if you do it’s unlikely the terms will be those you’d hoped to get.
What is a loan modification?
Whether you call it a loan modification, mortgage modification, restructuring, or workout plan, it’s when a borrower who is facing great financial hardship and is having difficulty making their mortgage payments works with their lender to change the terms of their mortgage loan. The workout plan could result in temporary or permanent changes to the mortgage rate, term, principle, and/or the monthly payment of the loan. Under Obama’s plan, loan modifications will be standardized, with uniform loan modification guidelines used by Fannie and Freddie Mac, and then they will be implemented throughout the entire mortgage industry. The plan’s goal is to help the borrower reduce their monthly mortgage payments to 31% of their gross income.
How does someone get a loan modification?
Call your lender, the company where you got your loan, and ask for the loss mitigation department. Honestly state your situation. They will assess it via phone calls and paperwork and determine whether you qualify for a modification. Keep copious, detailed notes on who you speak with and details of the conversations so you have documentation down the road if you are faced with foreclosure.
Also depending on the direness of your financial difficulties, it’s always good to hire legal counsel. Get a referral from your local state bar association. Or, call a local HUD-Approved Housing Counseling Agency for guidance.
One word of warning: This new bill has spawned a whole new wave of loan modification salespeople who might be perfectly fine and those who are not. Be careful. You can find loan modification reps on the web, but you must do your due diligence to make sure these people are legit, as well.
Doing a Loan Modification Yourself?
Step 1
You have to have a genuine hardship in order for the bank to agree to modify your loan. Examples of hardships include; illness, job loss, business failure, reduction in income, job relocation, divorce, medical emergency/sudden illness, payment has adjusted and you can no longer afford it, etc. Write this down in a tear jerking hardship letter. Include exact dates if laid off or change of job or hours have slowed down. This includes illness whether it’s yours or a family member that you have to take care of. Also death in the family. Or whatever the problem is.
Step 2
Write down your monthly budget before you contact the mortgage company. They may ask you for this information over the phone on the first contact and you want to be prepared. You will have to have an income in order to qualify. And your income will have to cover your monthly expenses plus your proposed mortgage payment. They will ask you every detail. Car fuel, groceries, utilities, credit cards, cell phone, car insurance, etc. So carefully plan this out to show that you have enough money leftover to pay your proposed mortgage. If you do not have an income, skip this step and move to step 6
Step 3
Depending on your situation, you will either be requesting; A) payment deferment. B) modification of interest rate. C) principal balance to be lowered to the present market value. D) combining your first and second loan (This is possible if you have a first and second with the same company) Your mortgage company should be walking you through the follow up steps.
Step 4
The actual procedure is started by contacting the loss mitigation or workout department of your bank, or banks if you have more than one loan. Most mortgage companies have their own forms, however, if they do not they will advise you on exactly what they’ll need from you. The bank will require a significant number of documents from you including but not limited to; the Hardship Letter you prepared stating why you need this, pay stubs, W2s, or documentation of income, a qualified Opinion of Price (Appraisal, BPO, or CMA. If you have no clue what these are you need to do more homework or seek a professional, call us for assistance), a request for what you want modified (from Step 3), Condition or pictures of the house (If it helps), Documentation of changes in the neighborhood, Crime rates (If it helps), Credit score knowledge (Do you still have good credit “ if not why?), Copies of your last statements (1, 2nd mortgage if applicable) AND FINALLY, REALISTIC EXPECTATIONS
Step 5
Very important to follow up constantly and consistently! They should assign you to a case worker. If they tell you it takes 3 weeks for an answer, call back in two! Especially if you are in a foreclosure situation.
How long does it take?
Most modifications can be professionally performed in 30-90 days. In the do-it-yourself the range is usually 90-180 days due to delays of not having the right department, paperwork delays and unrealistic requests
What if I need more help?
Although this is about loan modifications there are many other options that are available. If you are located in Ohio we can help you with many other options. These other options include: short sales, refinance options, bankruptcy, and other forms of debt negotiations. Whatever you do you must not procrastinate! Time wasted will cause you to lose your house.
How much does it cost?
If you do all the work on your own, it will probably cost nothing other than a significant amount of your time. If you have attorneys do it – probably $1,000 to $2500. So why pay someone for something you can do? Several advantages and unknown cost(s) must be considered. First a professional will know what is real and what can be obtained for you modification. Often we see people after the modification fails (and in most cases they do) and now facing foreclosure. Time is not your friend! When you hire someone to represent you the bank knows you are serious and not just trying to save some cash. Lastly, damage occurs to your credit until the issue is resolved. One or two extra months may ruin years of excellent credit, and you may risk losing your house to foreclosure.
If you, or someone you know is facing foreclosure Columbus, Ohio and are interested in attempting a loan modification or a short sale, please contact The Opland Group. We offer professional real estate advice and look forward to helping you!
The Opland Group Specializes in Real Estate Sales, Luxury Home Sales, Short Sales in; Bexley 43209 Columbus 43201 43206 43214 43215 Delaware 43015 Dublin 43016 43017 Gahanna 43219 43230 Grandview Heights 43212 Hilliard 43026 Lewis Center 43035 Marysville 43040 43041 New Albany 43054 Pickerington 43147 Powell 43065 Upper Arlington 43220 43221 Westerville 43081 43082 Worthington 43235
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