Surviving a Loan Modification

Thousands of Florida homeowners have found themselves stuck in a mortgage that they can no longer afford. Many of these homeowners have found a loan modification to be a good solution for keeping their home. The paperwork for these modifications can be a nightmare though, causing many to seek the help of an attorney. Many homeowners have applied two or three times and have been forced to reissue or change their documents due to errors, misunderstanding the paperwork, or not furnishing the correct documents.

Legislation has been enacted to create modification programs to help homeowners stay in their homes. Some mortgage modifications are mandatory for the mortgage lender to participate in, but some are voluntary. Many banks and mortgage companies are inclined to participate in loan modifications, especially in this housing market, so that a foreclosure can be avoided. The foreclosure could be less advantageous to both parties,  thus loan modifications have become a valuable option.

A loan modification could improve your mortgage obligation in the following ways:

  • By lengthening the time period of the loan
  • By reducing the interest rate
  • By changing the terms of the interest, from fixed to variable or vice-versa
  • By reducing or eliminating any cumulated fees

A good place to start in the process is by contacting your current lender. Prior to speaking with them, gather all of your paperwork for the loan and have a good idea about your current finances. After speaking with your current lender, you will have more of an idea of what you can accomplish and how to proceed. However, do not assume that your current lender is your best and only option. There is a lot of competition out there and there may be other places that would suit you better. It is imperative that you ask questions about fees, the amount of time a loan modification can take, the documents they require, etc.  A consultation with three or more loan modification companies will give you an idea of which company might suit your needs best.

Information you will surely to be asked to provide includes pay stubs, bank statements, tax returns, a household budget, and your documents about the current mortgage. The paperwork for the modification will be considerable and requires information from all of these documents. The company considering the modification will also want to see this information for their own perusal so they can decide if you are a good candidate. They will have many in-depth questions for you, so be ready to exercise patience with the questions and the time it will take for the paperwork to be reviewed. There is new legislation in 2011 that will streamline this process more, so there is light at the end of the tunnel.

Of special note is that it is very important to review your loan modification prior to agreeing to it. You do not determine the final result; the lender or loan modification company determines it. Review all their documents carefully and be sure you can agree to the terms. Throughout the process it is important to take notes, document phone calls by keeping track of who you talked with and when, and keep informed about new legislation in the industry.  If you are already facing a foreclosure and trying a loan modification to prevent it, the timing could be tricky, so be sure you start the process as early as possible.  Having an experienced debt mitigation attorney on your side could be your best choice in this situation.

Loan modification can be a great option for those facing mortgage payments that are too high, so try not to let the process wear you down. SmithLaw has helped many clients successfully navigate the sea of paperwork created during loan modifications.

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