Loan Modification Frequently Asked Questions

Q: What is a Loan Modification?
A: A Loan Modification is when the bank allows a change in the terms of your existing mortgage. The purpose of a modification is to significantly lower your monthly payments, for either a temporary or permanent period of time.

Q: Who qualifies for a loan modification?
A: Anyone that is having trouble paying their existing loan may qualify for a loan modification. In today’s housing market banks are willing to work with mortgage holders who are having trouble paying their mortgage. However, homeowners with a high probability of getting a loan modification are those currently in an adjustable rate mortgage, who have a high interest rate, and/or are experiencing any kind of hardship.

Q: Why will it work for me?
A: The government has asked for ALL lending banks to help in the foreclosure epidemic and modify mortgages for all troubled homeowners. Going to your lender with the representation of an Attorney, will make a scary process seem simple.

Q:  What if my credit is bad?
A: A Loan Modification is not based on credit. The banks are trying to make a good loan out of a troubled loan. The loan modification will not hurt your credit; generally only late payments or a foreclosure will negatively affect your credit score.

Q:  What if I have no equity or I am upside on my home?
A: It does not matter! Some banks are doing a principal reduction, which means the bank will discount the total loan amount to the current value of your home or close. Most banks or lenders rarely do this.

Q: What if my income is too low?
A: You will need to show the bank that you and all others in your household together can afford the new payment. 

Q: What should I expect the terms to be on my new loan?
A: Banks are rapidly changing guidelines for Loan Modifications. A bank will typically modify your loan into a loan you can afford and continue to pay. This may include a lower interest rate, payment reschedule, principal reduction, longer terms or any other modification that will make and keep the loan a “performing loan‟.

Q: How much can I save by doing a loan modification?
A: You can save hundreds or even thousands a month, depending on your loan amount. Remember, a loan is typically for 30 years. So the Loan Modification that saves you $500 a month really equals $150,000 over the life of the loan.

Q: Does every bank do loan modifications?
A: Most all banks do some form of a loan modification today. We are in a housing crisis and most banks are willing to work with clients to help them save their homes.

Q: How do the government programs affect my chances of getting a loan modification?
A: The government is telling banks they need to do their part to fix the housing crisis.  The Bail-Out Bill, Obama’s Home Affordable Modification Program (HAMP) or Making Home Affordable (MHA), and other plans will only improve your chances of getting a Loan Modification. The government is now offering incentives to banks and servicers, and even homeowners, depending on certain criteria. 

Q: How long does the process take?
A: Every bank is different, but it typically takes 30-90 days or more to get settle on a loan modification agreement.

Q: Are there any other costs involved? Appraisal, credit report, title, closing costs, broker fees, etc.
A: There are No other costs associated with a Loan Modification. The banks are modifying loans for no charge. They may sometime ask for a trial period, which demonstrates that you are serious about staying in your home.

For all other questions please call us at 800.738.1170

Loan Modification Case Studies