Loan Modification
Have you become, or about to become, delinquent on your mortgage payments?
If you find yourself in a position where you may not be able to make your mortgage payments, but want to stay in your home, you may be entitled to the benefits of a loan modification.
Federal and State governments have worked together to set up different loan modification programs to help deserving homeowners modify their mortgages under specific situations. The good news is that it is often much easier than you might think. The bad news is that the regulations and guidelines are often confusing, and many Americans have a difficult time working through the process.
If you want to stay in your home, reduce your mortgage payment, and get a permanent loan modification, then help is here.
The attorneys at The SOS Law Group have helped hundreds of clients obtain loan modifications. Simply complete our Fast Contact Form and one of our attorneys will be in touch with you immediately
Frequently Asked Questions
What exactly is a loan modification?
A loan modification is a permanent change to one or more terms of your loan that can result in a change in mortgage product type (e.g. making an adjustable-rate loan a fixed-rate loan), reduction of interest rate, reduction of monthly payment, extending the maturity date of note, etc.. There are different types of loan modification programs such as the Home Affordability Modification Program (HAMP) which is commonly known as “President Obama’s Program”. In addition, lenders often provide their own private “in house” programs that can be just as beneficial.
What are 5 requirements to qualify for a loan modification under HAMP?
Although other requirements may apply, here are the key requirements for a modification under HAMP:
- The home needs to be the homeowner’s primary residence;
- The mortgage must be less than $729,750;
- The homeowner is having trouble making their existing mortgage payment;
- The mortgage was established before January 1, 2009; and
- The homeowner payment on their first mortgage (including principal, interest, taxes, insurance and homeowner’s association dues) is more than 31% of their current gross income.
Can the lender include late charges in the loan modification?
Although other requirements may apply, here are the key requirements for a modification under HAMP:
Under HAMP rules, the lender is required to waive any administrative charges, late fees and penalties when offering a loan modification.
Are there incentives associated with the HAMP program?
Yes, the banks receive a monetary incentive from the federal government to offer help to qualified borrowers. In addition, homeowners who pay their new modified loan payments on time will be eligible for up to a $5000 credit to their loan balance. This credit will be applied once the borrower has completed 60 on-time payments.
How do I qualify for a loan modification?
The lender will evaluate your overall financial health to determine that you have the ability to pay a modified loan payment. First, you will need to supply the lender with evidence of your income which can be demonstrated by such items as a paystub or a pension distribution check. Second, you will need to complete a personal financial statement disclosing your expenses in detail (PFS). Third, you will need to demonstrate a financial hardship. Fourth, the lender will review the information provided to determine if you fit into a loan modification program.
Does every bank do loan modifications?
Most all banks do some form of a loan modification today. Because of the ongoing economic crisis, most banks are willing to work with clients to help them save their homes.
What is an acceptable “hardship” situation?
You must demonstrate your hardship in a letter to your lender that outlines the set of circumstances causing the hardship. Generally, lenders consider divorce/separation, loss of income, death of spouse, illness, job relocation or military service to be acceptable reasons to consider a loan modification. A compelling hardship letter included in your application is a very important part of a successful application.
Will a loan modification help me stop foreclosure?
Yes. The HAMP program has specific provisions prohibiting a lender from foreclosing while you are under review for a loan modification. In addition, Maryland has enacted a new mediation law designed to protect homeowners at risk of foreclosure. It should be noted that the homeowner must request mediation and must take proactive steps to insure protection under this law.
How does the new mediation law work?
Maryland homeowners at risk of foreclosure now have the legal right to request court-supervised mediation with their lender.
The new law requires lenders notifying homeowners about possible foreclosure to also provide information about loan modification programs such as HAMP. Servicers must give homeowners a 45-day notice of “intent to foreclose” before initiating the foreclosure process.
During the 45-day period, the servicer must look into loss mitigation options. It must also file a court affidavit stating a reason for any denial of such programs. Homeowners who disagree with the affidavit now have a right to court-supervised mediation by paying $50. Lenders pay $300 for the mediation.
Can my missed payments be added back into my new loan modification?
Yes, the arrears can be added to the new loan balance and spread out over the remaining term of the loan to allow the loan to be brought current. This process is known as capitalization.
What if my credit is bad?
A Loan Modification is not based on credit. The banks are trying to make a good loan out of a troubled loan.
What if I have no equity or I am upside on my home?
It does not matter! A loan modification is not like a traditional loan; therefore, the lender does not need to complete an appraisal of the property and the modification decision is not based upon the value of the home.
Can I do a loan modification myself or should I pay someone to represent me?
Homeowners don’t need to pay a company to obtain a loan modification. However, sometimes it can be better to have someone who understands the regulations and the loss mitigation procedures negotiate on your behalf. You should always at least speak to one expert, such as a lawyer or non-profit housing counselor, before contacting your bank. To help our clients be better informed, The SOS Law Group provides a 1 hour free consultation for the purpose of discussing all of your loss mitigation options, including but not limited to, loan modification, short sale, foreclosure defense and bankruptcy.
Can I be in bankruptcy and apply for a loan modification?
The borrower can be current, late, in default, in bankruptcy, or in foreclosure at the time the application for loan modification is made. The programs available will vary accordingly.
How do I start the modification process?
You can get the help you need to apply for a loan modification through The SOS Law Group. Our process is designed to take you step-by-step through the process. From calculating your debt ratio, to completing the financial statements, to writing your hardship letter. We then put the entire loan modification package together and submit it to the lender and negotiate the terms of the modification on your behalf.
Start your road to financial recovery now!
To determine if you qualify for any of the available loan modification programs, call The SOS Law Group at
Or simply complete the Fast Contact Form on this page and one of our attorney’s will contact you.
Short Sale Foreclosure Defense Beware of Scams
