Loan Modification Frequently Asked Questions

Q: What is a Loan Modification?

A loan modification is the negotiation between a borrower and a lender for new rates and terms which will result in more affordable mortgage payment to prevent foreclosure.

Q: Can I qualify for a Loan Modification if I am not late on my mortgage payments?

Yes, a few months ago, lenders wouldn’t even consider giving a loan modification to someone that wasn’t late on their mortgage, but not today.  In many cases, this is easier because you have maintained your good credit with your lender. Recent updates with the Making Home Affordable plan may allow for up to 9 million Americans to modify their current mortgage if they meet certain criteria.

Q:  If I attempted A Loan Modification On My Own and Got Denied, Can A Loan Modification Company Help?

It depends of the reason for the denial, but an experienced Loan Modification Company can review your situation and let you know whether or not you actually qualify for a Loan Modification.  An experienced Loan Modification Company can be a great resource as they have direct lines of communication and established relationships with most banks and lenders. This allows quicker access to information.

Q: How do I qualify for a Loan Modification?

Part of successfully negotiating a Loan Modification requires proving to the lender that you have the ability to meet the terms of the new agreement. This may include verifying that you have a steady source of income that will cover your total monthly budget as disclosed on your loan modification worksheet.

Banks also require a hardship letter that explains the circumstances which may be factors in why you are unable to make the current mortgage payments.

Q: How will A Loan Modification affect my credit?

It depends; if you are on time with your payments then you will not see any changes in your credit score as a result of a Loan Modification.  However, if you are late on your payments then a Loan Modification could actually improve your credit because the lender will start reporting your current payment history as “on time” vs. “past due.” Also part of the negotiations could be to remove some or all of the late payments from your credit report.  In either case making your future mortgage payments on time will benefit your credit score.

Q: Who qualifies for a Loan Modification?

More people qualify for a Loan Modification than you might think. Consider this; anyone having trouble paying their mortgage is a potential candidate for Loan Modification.

Prime candidates are homeowners with predatory loans which my include adjustable rate mortgages, high interest rates or homeowners who owe more on their home than they are worth, which most home owners in Florida are.

Candidates with any kind of hardships are also ideal candidates. The list of qualifying hardships is too long to list here but it includes reduced hours at work, job loss, divorce and illness.

Q: What kind of terms can I expect from Loan Modification?

Everyone’s situation is different as no 2 loans, banks or borrowers are exactly alike, so there is a huge variation in Loan Modification results.

On one end of the spectrum, the bank may only agree to bring the loan current and add the late payments onto the balance.

Best case scenario, the lender reduces your monthly payment to an amount you can afford. To accomplish this they may reduce your interest rate, extend the length of time you have to payback the loan, or agree to a loan forbearance of a portion of your principle balance could be reduced.  Principle reductions happen in very rare cases.