Loan Modification FAQ - Orange County
What is a Loan Modification?
A Loan Modification is the act of the lender making favorable changes to your existing loan. Loan modifications typically involve an interest rate reduction or an extension of the length of the term of the loan. In many cases this will lower the payment considerably. Although, you hear about a reduction in the principle balance, this has been the least likely scenario for a Loan Modification.
Who qualifies for a Loan Modification?
Typically a borrower has fallen behind in payments or is expecting a large increase in their monthly payments that they will no longer be able to afford.
There must be a financial hardship, however at the same time you must have enough verified income to be able to prove that you can make the new adjusted payment and all of your other monthly obligations. In many cases the term is too short for this to be a long term solution. The term of the adjustment varies and most likely will not be adjusted for the life of the loan. Some borrowers may get an adjusted term for 3 to 5 years which will you help you weather the storm, however many poorly negotiated terms are much shorter and do not achieve a favorable outcome.
What type of fee is charged for a Loan Modification?
Most all companies will charge you an up front fee that is not refundable, regardless if they obtain a Loan Modification or not. These fees vary from hundreds of dollars to as much as $4,000.00. Most loan mod contracts will state that the fee is earned by the work that is preformed on your behalf and do not promise a Loan Modification. Regardless if the terms are desirable or not, if the company negotiates a Loan Modification they have contractually done their job.
If I already did a Loan Modification can I do another one?
Yes, however you can only do a Loan Modification once every 12 months.
Statistics have shown that many people have fallen behind after a Loan Modification either due to new financial hardships or under estimating their true monthly expenses.
If you are unemployed, this will most likely not be a promising option for you. The Short Sale Process would be your best option at this point.
Don't wait any longer, act today!
Do not sign over your deed to an Investor!
Be aware of the offer of the Impossible Refinance.
Be aware of an offer that is promising Cash to the Seller at Closing.
If there is no equity in your property there is absolutely no legal way
that you can receive cash from the sale unless negotiated with the bank.
Receiving cash from outside of a negotiated Short Sale is Fraud.
