PHH Mortgage Loan Modification

PHH Mortgage is a hybrid company consisting of two divisions: one for retail lending, in which they originate their own loans, and a sub-servicing arm where they service loans for other lenders. Both divisions operate mostly in the sub-prime market, and subsequently, in mortgage assistance services for sub-prime borrowers facing foreclosure or bankruptcy.

One of the bank’s more recent programs is loan modification. The PHH loan modification process involves pausing the foreclosure process while the borrower works out more comfortable terms with the bank. To qualify, one must present a hardship letter explaining the circumstances of default, as well as some standard financial documents. Commonly accepted hardships include job loss, death or illness, and an unexpected rise in living expenses.

Borrowers can apply for a PHH Mortgage loan modification whether they have a direct or sub-serviced loan. However, priority is given to those who are in serious financial crisis and have already gone into foreclosure. Depending on the borrower’s case, a PHH mortgage modification may involve an interest rate reduction, an extension of term, or a change from adjustable to 30-year fixed rate.

There are also alternatives for borrowers who do not meet the requirements for a loan modification. A short sale, for example, allows them to sell the property at a discount and forward the proceeds to the bank as full payment. A deed-in-lieu skips the foreclosure process and simply signs the property over to the bank. While neither option will keep the borrower in his home, they reduce credit damage and make it easier to get back on track.