Mortgage Loan Modification FAQ's

Q: What is a Mortgage Loan Modification?
A: A permanent change in one or more of the terms of a homeowner's mortgage. No refinancing, appraisal or credit check is generaly needed.

Q: How do you qualify?
A: If you are in any financial hardship such as, but not limited to, the following: Loss of Income, Facing Foreclosure, Late on Mortgage Payments, Owe more than the Home is Worth, In an Adjustable Rate Mortgage (ARM) that has or is about to begin Adjusting and/or Cannot Sell or Refinance your Home.

Q: Is a Mortgage Loan Modification for you?
A: If you are in danger of losing your home due to a foreclosure, and have had no luck trying to sell your home, you need to take action now if you wish to keep it! Mortgage lenders have plenty of foreclosed homes on their books right now that they cannot sell. If they do sell these foreclosed homes, they sell for mere pennies on the dollar. They don't need any more liability! If you can prove that you can maintain a new modified loan plan with that lender, they want to work with you so you STAY IN YOUR HOME!

However, you do not need to be facing foreclosure, or late on any mortgage payments for that matter, to qualify for a Mortgage Loan Modification. If you present any financial hardship, you stand a good chance for a successful Mortgage Loan Modification. Therefore, if you have an Adjustable Rate Mortgage or Owe More than your Home is Worth, you show a financial hardship. Even if your payments on are on time, there is a potential that in the future, your ARM may adjust, resulting in a higher payment. You are demonstrating financial responsibility by showing to the lender that you are trying to be PRO-ACTIVE rather than RE-ACTIVE. You wish to work with them now, to modify and prevent any potential possibilities of a future hardship.

Q: Is this a process you can do on your own?
A: You can most definitely try to complete a Mortgage Loan Modification on your own. However, this can be a very tedious and time consuming project. You first need to contact your lender's Loss Mitigation Department and find out the exact process with that particular lender. Then it will take many phone calls, plenty of patience while on-hold, great communication, a ton of follow up, firm negotiating skills, and sheer determination. However, it can be done.

Q: Are there reputable Mortgage Loan Modification services out there?
A: There are many services out there that will assist you in completing a Mortgage Loan Modification. These companies will charge an upfront fee for their services of course. The average fee for a stand up Mortgage Loan Modification firm is approximately $2,500. There are many good guys out there...however, with every good guy, there are plenty of Scam Artists out there too. Therefore, due your homework! A good start is to check the Better Business Bureau.

A good Mortgage Loan Modification firm will be represented by a Law Firm. These firms will have actual licensed attorneys working, as your legal representative, and fighting like pit bulls to get the best mortgage loan modification possible. Also, all money that is collected from you should be held in a third party escrow account. Therefore, they cannot take your money and run. You should also only use a firm that offers a Money-Back-Guarantee. If they cannot help you out, there needs to be an out for you. They only get paid their entire fee if a successful Mortgage Loan Modification has been completed.

Q: How does a Mortgage Loan Modification affect my Rate/Term (results)?
A: Each and every Mortgage Loan Modification yield different results based on the borrower’s financial situation and the lender involved. That being said, I have seen some amazing modifications in the past few months. I have seen rates modified down to as low as 3.5%, terms from a 30yr Fixed to a 40yr Fixed, and I have also seen the greatest of all (IMO)...principal balance reductions of up to 33% of the original loan amount!!! This is incredible! Some lenders will just forgive this amount with no deficiency judgment or tax implications to the borrower!

Q: Will this have an adverse effect on my credit rating?
A: No. A mortgage loan modification will look much like a refinance on your credit bureaus. It will show the end of an old loan, and a new loan takes its place.

Q: How long does a Mortgage Loan Modification take to complete?
A: The process can take anywhere from 15 - 180 days. The average time is approximately 60-90 days. It all depends once again on the borrower’s situation as well as the lender you’re working with.

Q: What is Loss Mitigation?
A: Loss Mitigation is a third party helping a homeowner, a division within a bank that mitigates the loss of the bank, or a firm that handles the process of negotiation between a homeowner and the homeowner's lender. Loss mitigation works to negotiate mortgage terms for the homeowner that will prevent foreclosure.