Mortgage Forum

Glenn Dorsey

I had a lot of questions about a loan modification (also called a mortgage modification), so I have been busy getting some answers. For any of you guys that are having credit problems, falling behind on your home loan, or are just interested in learning about loan modifications, maybe the answers I found will help you out too.

1- What is a loan modification? It's just a term used when a mortgage company works with you to change the terms of the loan. In other words, your original contract may have called for the borrower to pay back $200,000 over 30 years at a fixed rate of $1,300 per month. If you are late on making your payments, you may seek a mortgage modification so that the bank will change the terms to lower the interest rate, lengthen the amount of time you have to pay off the debt, or allow just interest payments. Any part of the original contract can be changed, as long as both parties agree.

2- Why would I seek a loan modification? Because you can't meet your monthly house note payments, or you are behind on your note and you can't catch up. If you are unable to pay the amount due on your home mortgage every month, the lender may be able to work with you to lower the monthly payments on your house or property. This could be done by stretching the length of the loan out to a longer period, chopping the interest rate to make your mortgage affordable, or any other method that is legal. If you are simply behind on your loan payments, you can't catch up, but you could afford your monthly amount due if not for the late payments that are owed, then a loan modification can also help. Many mortgagees are willing to fold the past due amounts into your principal balance. This will erase the past due amounts on your mortgage and allow you to have a fresh start so that you only owe the regular monthly payments, and not the late payments that you couldn't afford to pay.

3- Why would i want to get a loan modification/ mortgage modification? Because you can't afford the payments on your loan as they stand. Maybe you are behind on several months worth of house loan payments, or you are having to sell off everything that you own in order to keep up with them. Whatever the case may be, you really can't afford the mortgage that you are in. Your credit is being ruined by making late payments every month, not being able to pay other financial debts, or even having to borrow more money from other sources/ banks to make your monthly house payments. You are seriously looking at filing for bankruptcy. You're desperate, struggling, and not really sure what else to do. If any/ all of these sound like you, then you now know that a loan modification may be an answer to your situation. With a mortgage modification that is handled properly, you can bring your financial life back into order. You won't feel lost and desperate, and you will be able to live up to your financial responsibilities without having to sell your home, or worst yet lose it in a foreclosure proceeding. For many families across America, a loan modification is the answer to their dreams.

4- What mortgage companies will work with the home owner/ mortgagor with a loan modification? Almost all mortgagees/ lenders are willing to work with the borrower on a loan modification. Some of these lenders that are known for helping their customers that are having credit problems includes: GMAC, National City Mortgage, Washington Mutual, Chase Manhattan Bank, Green Point, Countrywide Home Loans, ABN Amro, and most major home loan lenders. It's in their best interest really to make certain that the lender does not default on the loan. Foreclosure proceedings and auction sales are expensive for the mortgage companies, and it's usually a lot cheaper and more desirable for them to work with the borrower that is having financial hardships, but are willing and able to pay off their debt if it is structured properly for them.

I hope these questions and answers about loan modifications helps a few of you. I certainly don't know everything about mortgage modifications (or very much at all), but I am here to learn. If you have any pointers to add to this, that would really be great. I'm sure that hundreds of home owners that are having a hard time will be reading this eventually, so it would be great for all of us to combine our knowledge about loan modifications here so that others may benefit from it.

Peace and good luck all!

Glenn

gtull1

Good information on loan modifications glenn. Very nice!

I don't really know much about a loan modification, but I did a little research into it. You've covered a lot of it, but I can add this from what I found:

When applying for a loan modification, the mortgage company can inspect the home before approving or denying the request. This makes good sense because the bank wants to make sure that your house is still standing. I'm sure many people have trashed their house and then tried to modify the original loan agreement.

The PMI Mortgage Insurance Company just announced that they have streamlined their loan modification process. This shows that the number of homes that are going through foreclosure is on the rise, as borrowers took on mortgages that they really couldn't afford. This is great news for those that are having credit problems. Apparently the new mortgage modification process just got a lot easier with PMI. I would expect to see other major home loan companies follow suit shortly as the mortgage crisis continues to escalate.

Apparently some mortgage companies make more money by foreclosing on the home loan than by granting a mortgage modification! This one shocked me. It looks like the U.S. Congress is trying to push through a bill to make it easier for loan modifications. Courts are also attempting to force the lending companies to modify the terms of the lending contracts. From what I have read, some lobbyists in D.C. are going bonkers over this. One even admitted that his client prefers the easier money with a foreclosure. That is unbelievable!

That's it for now. If I find anything else I will pass it on in this thread.