Loan Modification Frequently Asked Questions

By Author: Nick Adama
Total Articles: 197
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A mortgage modification is quickly becoming the fastest and easiest way to stop foreclosure. A mortgage modification is when the terms of a loan are permanently altered for the life of the mortgage. There are many questions home owners have about loan modifications and hopefully this article will help clear some of them up.

How does a mortgage modification stop foreclosure?

A mortgage modification is when a bank reinstates a note with a lower interest rate and/or shorter term. This immediately stops foreclosure because all the back payments and arrears are either eliminated or added back into the loan. With a mortgage modification, many homeowners are able to prevent foreclosure and cut their mortgage payment in half!

What are the qualifications for a loan modification?

To get a mortgage modification, you will need to prove that you have sufficient income to make the new adjusted mortgage payment, but not enough to pay the arrears and continue with the old payment. Home owners will need to show evidence of income and evidence of the hardship that caused them to fall behind.

My mortgage company ...
... turned me down for a mortgage modification or has not approved mine yet. What should I do now?

In many cases, we see mortgage companies automatically turning down mortgage modification requests, without taking all information into account. This is a result of both the lenders being overworked and servicers who do not want to provide modifications. Another gigantic problem today, is when banks tell homeowners that they are "working" on their application, when actually nothing is happening. While the home owner waits, the home sells at auction and the house is gone forever, with no modification.

In most situations, a good modification professional can approve a better mortgage modification than you will get on your own, saving $1,000's per year. If you are not able to get a modification on your own, don't be afraid to hire an expert to get it done. Just make sure you do research and find an honest negotiator to work with. Even when your mortgage company has rejected a modification, it's highly likely that you would get approved when using a professional negotiator.

Does my mortgage company have the right to inspect my home before a mortgage modification?

Yes. The mortgage company may enter your home to verify the value of the home. Another objective of the inspection is for the mortgage company to verify there is nothing wrong with the home that would stop the home owner from paying the new lower payments.

What happens to all the penalties and fees on my mortgage with a modification?

With a mortgage modification, all the late fees should be erased and should not be added to the total payoff on the loan. If your mortgage company is trying to include late fees in your new loan modification, you should argue this and have them removed. With some loans, when these fees are not waived, they could be out of compliance with current laws. When the laws are not followed, these fees must be negotiated with the mortgage company.

How long does a mortgage modification take?

When getting a mortgage modification, you need to make sure you allow plenty of time. We recommend a min. of 90 days prior to your auction. If your bank does not work with you, or if they have not given approval to your modification within 45 days, then you need to seek professional help. Foreclosure assistance companies can get your deal approved in as little as a few days, so if your modification is taking longer than a month, you should start thinking about alternatives.

The best information to remember when trying a mortgage modification is to not let your mortgage company delay your case until later or just before the sale. In most of the cases we see, when the lender does not finalize the deal within 30 days, they will likely not do it at all. This is when you need to push your bank harder or decide to hire a modification company to do the negotiations for you. Don't be discouraged if they reject your modification when you are attempting it alone. Hiring someone will cost a little up front money, but it will allow you to save the home and save you tens of thousands of dollars in the future.
Nick publishes articles to give advice to homeowners who are the in the process of stopping foreclosure on their houses and learning how to repair their finances afterward. His other articles describe various solutions to foreclosure, including mortgage modification, obtaining a freclosure refinance, and even answering a foreclosure lawsuit to get more time from the courts to work out a better solution. Visit his site today to read more about how foreclosure works and how you can stop it while you still have time: http://www.foreclosurefish.net/