The loan modification foreclosure program can be frustrating and confusing for many distressed homeowners. If you are considering contacting your lender about a loan workout to avoid foreclosure, you need to get as much information upfront as possible so you will be prepared and able to present your case in the best possible light. Programs and guidelines are changing and it is getting much easier for homeowners to get the help they need. To help you understand how the process works and what you can expect, here are the Top 10 Questions and Answers:
1. Define loan modification?
A loan modification is a undying variation in one or more conditions of a borrower's home loan, allows the loan to be reinstated, and results in a payment the homeowner can afford.
2. Do the lenders include late charges in the Loan Modification?
Per HUD, the accrued late charges should be waived by the lender at the time of the loan workout-this varies depending on the type of loan-but always request a complete breakdown and description of all fees and penalties from your lender
3. Government programs help me get a loan modification?
The Federal government has allocated $75 billion dollars to subsidize lenders and servicers who offer a loan workout to their clients. Now, the banks will have a monetary incentive to offer help to qualified borrowers. In addition, homeowners who pay their new modified payments on time will be eligible up to $5000 credit to their loan balance.
4. How to qualify for Loan Modification?
(1) your lender is looking at is your ability to make the new modified payment now and in the future. (2)You need to supply the lender with proof of your income, along with a complete and accurate financial statement detailing your income and expenses to show them that if granted the modification, (3) you will be able to afford the new, lower payment
5. Do I have to be currently delinquent on my payments to get a loan modification?
Most lenders are now accepting applications from homeowners who are not currently delinquent, but who are able to prove to their bank that due to imminent interest rate increases, they will no longer be able to afford the loan payment under the terms of their loan. It is advisable to contact your lender as soon as possible to start the loan modification process, regardless of if you are delinquent or not.
President Obama's Homeowner Stability and Affordability Plan offers real hope for millions of homeowners who need a solution to stay in their home. Not everyone will qualify however, and interested borrowers will have to complete loan modification foreclosure application forms, provide proof of their income and meet certain eligibility requirements.
Most lenders are participating in this new government subsidized plan, and homeowners are encouraged to learn how they can qualify and apply for a loan foreclosure Program and avoid foreclosure.
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