A loan modification is the process of renegotiating one's mortgage with their current lender. The lender will look at your loan modification as "loss mitigation". In other words, the lender wants to minimize their loss from a defaulting loan. Loss Mitigation is not based on credit. It is solely based on the ability of the homeowner to afford some type of reasonable payment moving forward.
A loan modification is defined as a written agreement between you and your mortgage company that temporarily or permanently changes one or more of the original terms of your loan to make the payments more affordable. If you can negotiate a substantially reduced payment, or even a fixed interest rate, this could be the option that provides the remedy you seek.
The most common loan modifications include:
Be prepared; this may be a long and tedious process and there is no guarantee that the bank will work with you. That does not mean you shouldn't try if you want to keep your home. Remember, the lender doesn't really want your house, but they do want to make sure if they offer a loan modification that you will not find yourself in the same position (behind on payments) in the future and have to begin this process again.
You can contact your lender for a loan modification or you may seek loan modification assistance from a qualified RealtorŪ or other Loan Modification Company. BEWARE: If you are behind in your mortgage payments, you may be contacted by individuals or companies that will offer to help you work out a loan modification with your lender or provide other services to you in order to help you prevent a foreclosure on your home.
You must be very careful if you are asked to pay for any of these services in advance, whether in cash, check or by charging your credit card. First, California Civil Code Section 2945, which regulates "foreclosure consultants", forbids anyone who falls under the definition of a "foreclosure consultant", as well as a real estate licensee, from collecting any advance fees for these types of services if a Notice of Default has been recorded against your property.
If your lender has recorded a notice of default, do not pay an advance fee to a real estate licensee, or to any person or entity. California licensed lawyers when rendering services in the course of their legal practice(s) are exempt from this prohibition. There are non-profit agencies that can assist you without charging you a fee and real estate licensees who can represent you for a fee to be paid after they have completed their work.
Please read the report titled DRE Loan Modification Fraud Warning
If you have questions or need help, contact us today.
The information contained in this report is deemed to be accurate but is not guaranteed.
Sources: "The Foreclosure Bible", the California Association of Realtors, California Department of Real Estate.