SOLUTIONS
LOAN MODIFICATION
What is a loan modification?
A Loan Modification is a permanent change in one or more of the terms of a mortgagor's loan, allowing the loan to be reinstated, and resulting in a payment the mortgagor can afford.
COMMON QUESTIONS
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If I am in foreclosure can I still get a loan modification? The answer is yes, if you can clearly show a sensible plan to the lender. You can still get a modification of terms. Do I have to be behind in payments to get a loan modification? The answer is no, just the opposite is preferred work towards a modification before you miss a payment.
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COMMON QUESTIONS
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Will the loan modification include all costs accrued to do the modification?
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The answer is yes, Legal fees and related foreclosure costs may be capitalized into the modified principal balance.
Will the lender perform an interior inspection of the property if they have concerns about property condition? The answer is yes, the lender may conduct any review it deems necessary to verify that the property has no physical conditions which adversely impact your continued ability to support the modified mortgage payment.
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COMMON QUESTIONS
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Can I get a loan modification if I have a first and a second mortgage on my home? The answer is yes, it is possible to combine both the first and the second mortgage or the lender may waive the second. Can I include late charges in the Loan Modification? The answer is, accrued late charges should be waived by the lender at the time of the Loan Modification.
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Common questions
Is there a new basis interest rate which I may assess when completing a Loan Modification? The answer is yes the new basis interest rate is 200 points above the monthly average yield on U.S. Treasury Securities, adjusted to a constant maturity of 10 years. Can a I get a Loan Modification option if I am unemployed, but my spouse is employed, but the spouse’s name is not on the mortgage? The answer is based upon this scenario, if surplus income is sufficient to meet the new modified mortgage payment, but insufficient to pay back the arrearage. Your Lender will have to determine if the asset is eligible for a Loan Modification since the spouse is not on the original mortgage.
Common questions
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Can a Loan Modification include an escrow advance for Homeowner's Association fees? The answer is the loan modification must also escrow funds for those items which, if not paid, would create liens on the property positioned ahead of an FHA-insured mortgage.
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If I don’t qualify for a loan modification. What options do I have? Refinance into a new loan Sell your home Pre-foreclosure sale or short payoff: Assumption: A qualified buyer may be allowed to take over your mortgage, even if your original loan documents state that it is non-assumable.
If I don’t qualify for a loan modification. What options do I have?
Deed-in-lieu of foreclosure: As a last resort, you "give back" your property and the debt is forgiven. This will not save your house, but it is less damaging to your credit rating. This option might sound like the easiest way out, but it has limitations:
You usually have to try to sell the home for its fair market value for at least 90 days before the lender will consider this option This option may not be available if you have other liens, such as other creditor judgments, second mortgages, and IRS or state tax liens
Where to find answers
U.S. Department of Housing and Urban Development 451 7th Street S.W., Washington, DC 20410 Telephone: (202) 7081112 TTY: (202) 708-1455 Website: www.hud.gov Information is provided from the above resource.