What do you know about loan modification for your mortgage loan? A lot of people have some beliefs that may not be true. This article will help dispel some of those beliefs.
Myth #1: Homeowners must be behind in their mortgage payments. Not true! A person can qualify for a home loan modification even when their payments are current. Many people were given adjustable rate mortgages (ARMs) between the years of 2002 - 2006. These loans had very low initial interest rates, known as teaser rates.
The rates were appealing and the thought of owning a home lured people into these types of loans. The interest rates were scheduled to increase after a certain amount of time, usually 3-5 years. The borrowers were told that they could easily apply for a conventional loan before the adjustment date. They would be on their job for a long time, showing stability. They should be earning more money at the end of those years due to wage increases and cost of living adjustments (COLA). The new homeowners would be able to qualify for a conventional loan to replace the ARM without any difficulty.
This scenario did not play out for many homeowners. A worsening economy, tightening financial lending policies and a declining real estate market all played factors for people not being able to convert ARMs into conventional loans. Houses upside down since the time of purchase. Layoffs. Another wave of foreclosures are set to hit the market this year. Wouldn't it be easier to keep your home, if there is a way?
Myth #2: A homeowner can qualify for a loan modification if s/he has lost her/his job. No. Not true. It is true, however, that the borrower must be suffering from sort of hardship, whether temporary or permanent.
Hardships include, and are not limited to:
Death of the Borrower, the Spouse, or of the Co-Borrower
Illness of the Borrower or Family Member
Loss of work hours
Inability to rent or sell the house
Job transfer
Failed business
Reduction in pay
Incarceration
Military duty
Divorce or marital separation
Note that "my Realtor lied to me" and "my loan officer/broker lied to me" are not on the list of hardship reasons.
The borrower has to be able to afford the house, just not the current mortgage payment. Therefore, the household must have incoming wages - someone must be working and earning enough to support a newly defined mortgage payment.
Myth #3: Only loans on the primary residence are eligible. Again, not true. An investor with multiple properties or an owner of a commercial property can be granted a loan modification. These types of mortgage modifications usually require more time and are generally harder to get. However, these situations are eligible.
Myth #4: Homeowners must pay upfront. False. Many people were burned by unscrupulous companies which employed this "pay upfront" policy and that preyed on desperate folks wanting to save their homes. Legislation has now been enacted to prevent collection of monies before services are rendered. Money should only be collected when the homeowners know if they have a solid opportunity to qualify for a loan modification, and not before.
So how do homeowners/property owners find out if they have a solid opportunity for a mortgage loan modification? The process is called a forensic loan audit. Lawyers look at the loan paperwork and determine if the loans were written in compliance with federal and state lending laws. Up to 85% of loans written between 2002 - 2006 contain errors. The best way to have a mortgage loan audit done is through an independent agency, not your own lending institution. (There is an inherent conflict of interest for your bank to examine its own paperwork.)
Some companies charge anywhere from $400 to $1000 to perform a loan audit. Is it worth it? Yes. If mistakes are found, the forensic loan audit will add a legal punch when submitted to the bank for a loan modification. The best part of this article is to inform you that there are companies who perform the forensic loan audit for free. Find out, for free, if your loan has mistakes that are costing you money in the form of higher than necessary monthly payments. Arm yourself with knowledge so you can make an informed decision as to whether a loan modification is right for you and your family. A loan modification allows you to stay in your home. Learn the facts about your mortgage loan.
Tags : refinance loans aviation accident attorney remortgage house
