Loan Modifications
A
Loan Modification is a permanent change in one or
more of the terms of a loan allowing the loan to be
reinstated resulting in a lower payment that the
borrower can afford. In most cases a homeowner in need
for mortgage help will indeed qualify for a loan
modification.
To ensure that you understand what a loan modification
will actually do for you, consider the following facts:
1. A loan modification is indicated when the
original loan that is secured by a residence has terms
that make it impossible for the homeowner to continue
making the payments, thus risking the loss of the
residence.
2. Loan modifications are not the same as
debt consolidations, refinancing loans, or even
forbearances. Instead, they are long term solutions for
rising interest rates or other hardships that are
threatening to overwhelm the budget of a homeowner.
3. Loan modifications stop foreclosure
proceedings and instead reinstate the loans as they are
being modified.
There are some other facts that explain why lenders are
actually in favor of working with borrowers and their
legal specialists in order to negotiate equitable loan
modifications.
1. All or portion of the outstanding
principal and interest, past due escrow, late fees, and
even costs may be rolled into the loan modification and
thus will not be lost revenue to the lender. Since they
are spread over a long period of time, they do not pose
a problem to the borrower.
2. Modified mortgages may use a step rate
approach or an extended term methodology to provide for
the repayment of the due and past due funds. The lower
payments ensure the repayment by the borrower while to
the lender the added time is actually money in the bank
in terms of yet to be earned interest due.
3. Foreclosure is avoided and even though
banks routinely foreclose on properties and sell the
homes to other buyers for a fraction of a price, the
slowing housing market has made it difficult for banks
to unload such properties and then recover any
additional funds from the previous homeowners. Loan
modification is a fiscally much more attractive solution
for any lender.
4. A modified loan protects the credit
rating of a borrower and it also helps lenders in
showing less defaulting loans in their portfolio. This
of course makes a good impression when the financial
institution is wooing potential investors.
Here are the requirements you must meet in order to be
considered a good candidate for a loan modification
process to be started on your behalf:
1. Your monthly mortgage must be affected by
a verifiable reduction in income.
2. It is required that you are currently
employed or have another source of a stable and
predictable monthly income that is provable.
3. The home for which you are seeking to
obtain a loan modification must be your primary
residence.
David T. Seif represents clients throughout the state
of Florida including the cities of Boca Raton, Boynton
Beach, Carol City, Cooper City, Coral Gables, Coral
Springs, Davie, Deerfield Beach, Delray Beach, Fort
Lauderdale, Hialeah, Hollywood, Jupiter, Lake Worth,
Miramar, Miami, Oakland Park, Palm Beach, Palm Beach
Gardens, Palm Springs, Pompano Beach, and Rivera Beach
Broward County - Miami-Dade County - Palm Beach County