A mortgage loan modification is something you are going to hear a lot about in 2009. This program, not fully invented yet, is a process whereby the lender agrees to modify the existing terms of your loan. Many times there is an interest rate reduction, reinstatement and often-missed payments are forgiven.
You can apply for a Mortgage Loan Modification yourself, but it is grueling work. Even professionals like us have a hard time negotiating with these lenders and an emotional attachment to the property in question would make an already stressful situation that much harder.
Lenders have a Loss Mitigation Department, which handle these requests, but trying to get through to them is nearly impossible, unless you have already missed a payment. Then, the sudden interest is triggered and all of a sudden they want to speak to you.
I encourage you to open and to keep current, a dialogue with your lender. Be honest with them and explain to them the reasons for your economic downturn. They may request that you submit a Hardship Letter, a sample of which is available on our website. This letter details succinctly the details of your hardship.
Has somebody lost his or her job? Is there an illness in the family? Medical bills? Perhaps another mouth to feed? All these are hardships that may lead to economic stress and your inability to keep current on your existing loan.
The lender will require that you submit documentation as well as a stack of paperwork proving what you have told them. This will include tax returns, pay stubs, bank statements etc. And there in no guarantee that they will actually go ahead and modify your loan. If you are too far underwater, they may suggest a short sale.
If the lender sees that you can not afford a modified mortgage, they will not go through the process and work to adjust your mortgage. Why should they if you are going to default in another six months anyway? That is why it is important not to hide income from your lender. They want to see that you can keep your home and if you are receiving rent money or other income that is not documented, reveal this to your lender. Was not false representation of the truth what caused a lot of this distress we are going through?
A short sale situation occurs when you owe more than your home is worth. In that case, a lender will agree to take a loss by accepting a sale price for less than you owe. Why would they do this? The reason for the lender’s sudden generosity is that they are trying to stay afloat themselves. Too many non-performing assets on their books means they do not have this tied-up money available for lending. Without loans, a bank is dead in the water.
If you want to try to modify your own loan, get the Hardship Letter sample on our website. If you want to trust the process to an attorney-led team, please consider CMA Capital Funding Inc as your representative.