What is a loan modification?
A loan modification is where you would modify your mortgage to make it more affordable for you. This is normally done by negotiation with your bank or mortgage company. Interest rates and principal balances can be lowered, sometimes by quite a bit.
How does someone know when they should look to modify their home loan?
As soon as someone finds it difficult to make their mortgage payment it’s time for them to look into having their home loan (or loans) modified.
Does a person have to have an adjustable rate mortgage to get a loan modification?
No. I’ve helped people with both adjustable rate and fixed rate mortgages get their loans modified. Really, anybody who feels their payment is too high for them, such as people whose income has decreased, or whose expenses have greatly risen since they first took out their mortgages, are good candidates. This would include folks who have lost their jobs, had their hours at work decreased, have new, large medical expenses, etc. One thing that is important to know is that a person does need to have some amount of income in order to qualify for a loan modification, since they will need to be able to pay whatever new loan amount is agreed to.
If someone’s home is in foreclosure, is it too late for them to get a loan modification?
No, not at all! In fact, while the loan modification process in happening, foreclosures are usually postponed. I’ve even had people call me a few days before their home is scheduled to be auctioned off, and we’ve gotten their loans modified, which has allowed them to keep their homes!
On loans that are modified via a loan mod, are the interest rates usually fixed rates or adjustable rates?
After a loan is modified, the new interest rates is almost always a fixed rate.
On the typical loan modification, how much can someone expect to get his/her loan payments reduced?
It really varies. However, some examples of loans we’ve had modified include: one person’s payment decreased by $500 a month, and another person’s payment decreased $1,200 a month, from a $2,200 per month mortgage payment to a $1,000 per month mortgage payment..
How long do most loan modifications take to complete?
It normally takes between 90 and 120 days to get a loan modified.
When doing a loan modification, does the home owner have to agree to the first offer the bank makes?
No. However, the key is that you need to know the number to start with, and you need to be darned close. If you're way too low, the banks will often just say, "no," and they won't even spend time negotiating with you. So, this is where experience is of critical importance, because the only way to really know what number to start with is to have done a lot of loan modifications. That's why many people who try to do loan modifications themselves aren't successful--they just don't have the experience it takes to get the job done.
Do many people abandon their properties, rather than work to avoid foreclosure?
No, and that's good, because abandoning a property is one of the worst things a homeowner can do. In some places, the bank can sell the property at auction then pursue a deficiency judgement against the homeowner for the money that is still owed on the home. Additionally, abandoning a home will almost surely affect one's credit score in a very negative, and very long-lasting, way.
Can someone with a really low credit score still get a loan modification?
Your credit score has nothing to do with your ability to get a loan modification. In fact, they don’t even look at your credit score when deciding whether or not to give you a loan mod. What they do look at is your income versus your expenses, and the change in your circumstances (such as a layoff, large medical expense, divorce, etc.).
How does one go about doing a loan modification?
I would recommend that someone contact a loan modification expert to get help going through the process. While it is possible for a layperson to get a loan modified, the chances of getting the modification done and done right are a lot higher if one uses a experienced professional.
There are a lot of companies offering to help with loan modifications. How can someone find a reputable company to work with?
This can be really difficult because there currently are no regulations for these companies in most states. In the newly published book, Loan Modifications for Dummies, the author recommends that people "contact a few potentially qualified candidates, gather information about them, then whittle down the list until the best individual or company is (hopefully) found." Always look for someone who, in the very least, has a physical address, a professional looking website, and who offers a free initial phone consultation. Of course, if you can get a recommendation from a friend, that's usually an excellent way to go as well.
You work for yourself, even though you’ve had the opportunity to work for some big law firms. Why have you decided to “stay small,” so to speak, and work on your own?
I work for myself because I have found that at large companies, clients often get lost in the shuffle. Having been though difficult financial times myself, I know how stressful it all is and I don’t want my clients to feel that they are just a number. For instance, I try to be available to take calls in the evenings and on weekends, while most loan modification firms aren’t available beyond regular business hours. But when someone is sitting at home, worrying about their finances, it can mean an awful lot if they can talk to someone right away and not have to wait until the next day or even over an entire weekend.
If someone's already tried to do a loan modification on his/her own, but had no success at it, would you be able to help get that loan modification done?
Typically, yes, we have success with the loans we work on modifying. We've actually had a number of clients come to us who have tried doing their own loan modifications but have not had any success at it. I think a lot of our success with getting the job done is due to the fact that we've done a number of loan mods before so we know the right questions to ask and the right things to say.
We are located at 347 Broad Cove Rd., Hopkinton, NH 03229 - Phone: 603-746-3386 - E-mail: trish@WRDuclos.com