Loan Modification
Loan Modification: an overview
In history loan modification was reserved only for those who were in some kind of financial hardships but could make their current payment, though catching up for back payment was not possible for them.
Loan modification is a process whereby a homeowner's mortgage is modified in order to help the borrower to stop foreclosure.
Loan modification becomes only option for those homeowner’s behind on their mortgage who:
- Has a low credit score.
- Do not have enough equity to refinance.
Loan modification becomes only option available to some home owners since no one is ready to do a:
- Mortgage Refinance, or
- Short Refinance
Why loan modification?
Loan Modification is the perfect solution for both the lender and the borrower to avoid the hassle of the foreclosure process.
Different ways of loan modification
Their can be several ways or combination of ways in which a Loan Modification can be done. For example:
- Interest rate could be lowered.
- Interest rate could be changed from floating to fixed rate.
- Re-amortization of loan.
- Principal could be lowered.
- The time period of repaying the loan could be lengthened.
Process for loan modification
Step1: Talk to a financial coach
Step2: Talk to the attorney from your state
Step3: Send us all your documents.
- A. Collect a mortgage pay off statement from your lender, this a statement that gives you an estimate of how much you would need to pay to the lender to completely pay off your loan.
- B. Figure out the current value of your home. You can also contact a local Realtor and ask for CMAS in anticipation of selling your home. Realtor will provide with this report free of charge in anticipation of obtaining the listing if you decide to sell your home.
- 1 month of Pay stubs
- 2 years Tax Returns
- 2 years of W-2's or 1099's
- 6 months of P & L statements (if self employed).
- 2 months' Bank Statement.
- IRA, 401K, or other retirement fund statements.
- Stocks, bonds and other assets.
- All of your monthly bills.
- Prepare your monthly Income and Expense Statement.
Fee structure for loan modification
Signup fee: $500
Success fee: 5% of the amount saved.
Cap is of $5000
For e.g:
Before Loan Modification:
Need to pay for 40 more months @ $1000 per month
After Loan Modification:
Need to pay for 40 more months @ $800 per month
Your Savings:
$200 X 40 = $8000
Success Fee You Pay: $400
Top 5 resources for our clients:
http://www.hud.gov/offices/hsg/sfh/nsc/faqlm.cfm
http://www.fdic.gov/consumers/loans/loanmod/loanmodguide.html
http://www.nj.gov/dobi/division_consumers/finance/modifyscam.htm
