Loan Mortgage Modification Process
http://www.realestategranite.com/mortgage.html The Mortgage Loan Modification process provides for either a permanent change in one or more of the terms of a mortgagor’s loan, which allows a loan to be reinstated if the loan is behind or past due and results in a payment the mortgagor can afford. This site will give you some helpful tips and hopefully answer your questions regarding mortgage loan modification process. First there are a couple of facts to consider in the process: At any time please feel free to leave me a comment below with any questions you might have. • Typically a mortgage loan modification results in a permanent change in the interest rate of the loan for the life of loan providing you leave the loan on good standing. There are times when capitalization of delinquent principal, interest, or escrow items occur, and these do happen often so make sure to take note of this when reviewing your documentation. Some of these considerations are: The possible extension of loan term during the mortgage loan medication process. There are times when any combination of principal, interest or escrow capitalization occur this results in the re-amortization of the loan. • Lenders may at times use a maximum interest rate adjustment to current market rate plus 150 basis points although at mortgagee’s discretion, note interest rates may be reduced below market. This is seen increasingly often in the mortgage loan modification process. All or a portion of the PITI arrearage (Principal, Interest, and Escrow Items) may be capitalized to the mortgage balance. Foreclosure costs, late fees and other administrative expenses may not be capitalized. No administrative fees for completing the Loan Modification documents can be passed on to the mortgagor. The modified principal balance may exceed the principal balance at origination. The modified principal balance may exceed 100% loan-to-value. Mortgagees may re-amortize the total unpaid amount due over the remaining term of the mortgage, or may extend the term not more than 10 years beyond the original maturity date or 360 months from the due date of the first installment required under the modified mortgage, whichever is less. All Loan Modifications must result in a fixed rate loan.
The Loan Modification must fully reinstate the loan. Subsequent defaults are to be treated as a new default. This differs from lender to lender. Depending on the type of loan. For example, HUD or VA loans do require that subsequent defaults be treated as a new default. There have been many different opinions about eligibility of the mortgage loan modification process. Keep in mind that a number of factors may contribute to the success of a loan modification. • For example, the mortgagor must be more than 60 days delinquent (3 full payments due and unpaid) or more. This is not always the case with private mortgages and increasingly mortgage holders are receiving some form of modification even if they are not in default and all payments have been kept up to date. Additional parts to the mortgage loan modification process are as follows: • • • • • • • • • • Generally the loan modification is granted if there is a default due to a verifiable loss of income or increase in living expenses. The Loan Modification mortgage must remain in first lien position. Loan may not be in foreclosure when executed. Owner-occupant, committed to occupying property as primary residence. Mortgagor has stabilized surplus income sufficient to support the Loan Modification mortgage. Does not have another FHA-insured mortgage.
Mortgagee is required to assess the mortgagor’s financial condition. Mortgagee must verify the property has no adverse physical conditions. Home repair costs may not be calculated into the Loan Modification. Mortgagee must comply with State and Federal disclosure laws or notice requirements, including whether recordation is necessary to maintain first lien position requirement. Loans reinstated using a Loan Modification within the past three (3) years requires written justification prior to a subsequent modification. Subsequent reason for default cannot be related to the previous reason for default.
So, what steps should you take as a consumer and what should you do. You should contact your lender to determine eligibility, but you may be eligible if, among other factors: • The home is your primary residence, and you have no ownership interest in any other residential property, such as second homes. Your existing mortgage was originated on or before January 1, 2008 and you have made at least six payments. You are not able to pay your existing mortgage without help.
Your total monthly mortgage payments due were more than 31 percent of your gross monthly income. As of March 1, 2008 if you have a fixed rate mortgage As of March 1, 2008 or the date of your loan application if you have an ARM
You certify that you have not been convicted of fraud in the past 10 years, intentionally defaulted on debts; and did not knowingly or willingly provide material false information to obtain existing mortgage(s). Generally there is a formula that lenders use to determine that the mortgage holders total monthly mortgage payment on the new loan is less than the borrower’s aggregate total monthly mortgage payment on his or her existing mortgage(s), including any subordinate mortgage liens, based on a fully-indexed, fully-amortizing PITI payment. So, keep this in mind when performing your calculations of income and expenses.
Loan Mortgage Modification Process http://www.realestategranite.com/mortgage.html