Q. What is a loan modification?
A: A modification is a change to the original mortgage terms. It may include a change to the product (an ARM to a fixed rate mortgage), interest rate, amortization term and maturity date, and/or unpaid principal balance. The change/s is made to create a more affordable payment for the borrower.
Q: What is a successful loan modification?
A: A successful loan modification is a modification creating a monthly mortgage payment that is sustainable for a troubled borrower by targeting a benchmark ratio of housing payment to monthly gross household income.
Q: Why is it necessary?
A: With the rise in serious delinquencies and increasing number of loans in foreclosure, this program will help borrowers who have missed or are about to miss payments, but want to keep their homes.
Q: Who is eligible?
A: To qualify for the modification, you must certify that you experienced a hardship or change in financial circumstances, and did not purposely default to obtain a modification, and have not filed bankruptcy. Other hardships include Adjustable Rate Mortgages, Sub Prime Loans, Interest Only, Fixed Incomes, and loss of Home Value.
Q. So how do I get started to modify my loan?
A: Do your homework – learn as much as you can about the loan modification process so you can make informed decisions. Call and speak to one of National Loan Restructuring’s specialists and they can help answer your questions and help you stop or prevent foreclosure on your home.
Q. Can I do a loan modification meself or should I pay someone to represent me?
A: This is entirely up to you and how comfortable you are in dealing with your lender. If you are currently behind on your mortgage or in default, you will have a harder time negotiating from a position of power. Using a mitigation company such as National Loan Restructuring may be in your best interest. NLR will analyze your situation and offer proven foreclosure solutions to save your home.
Q. How will the new government programs help me get a loan modifcation?
A: The Federal government has allocated $75 billion to subsidize lenders and servicers who offer a loan workout to their clients. Now, the banks will have a monetary incentive to offer help to qualified borrowers. In addition, homeowners who pay their new modified payments on time will be eligible for up to $5000 credit to their loan balance.
Q. Do I have to be currently delinquent on my payments to get a loan modification?
A: Most Lenders are now accepting applications from homeowners who are not currently deliquent, but who are able to prove to their bank that due to imminent interest rate increases they will no longer be able to afford the loan payment under the terms of their loan. It is advisable to contact your lender as soon as possible to start the loan modification process, regardless if you are delinquent or not.
Q. What is an acceptable hardship situation?
A: Each homeowner has a unique set of circumstances that caused them to fall behind on their home loan, but generally the lenders consider divorce/seperation, loss of income, death of spouse, co-borrower, or family member, illness, job relations, or military service to be acceptable reasons to consider a loan modification. An NLR restructuring specialist will be able to go over your unique situation, and decide if you qualify and if a loan modification is right for you.