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Frequently Asked Questions
What is a Loan Modification?
This term has been getting a lot of attention lately and rightfully so. With millions of homeowners stuck in toxic adjustable rate mortgages and no ways to refinance out of them, loan modification may be the only way to assist struggling borrowers. This term is used when your lender modifies your current mortgage (same loan you have, only changes are made to the note) in order to work with you and make your mortgage more affordable. A modification to your rate, balance of loan, delinquent fees owed, term of loan etc. can be made by the Lender. In the past this was only used when a borrower was delinquent but now we will see it being used before someone is delinquent. This will be the hottest term and the best way to help people avoid foreclosure.
Can a homeowner negotiate a modification themselves?
Yes, but the results will vary from homeowner to homeowner depending on the experience and the mortgage lender.
Does a homeowner need to use a HUD approved agency?
No, a homeowner needs to do as much research as possible in order to make a good decision on which company they choose to represent them. HUD approved agencies do offer assistance for homeowners, but the service is limited and the process can be as lengthy and frustrating as talking to the lender.
How long does the process take to complete a successful loan modification?
The average time frame for a successful loan modification is between 45 to 60 days. This time frame has been increasing recently because of the amount of mortgage defaults within the industry.
Can a loan modification company charge up front fees to assist homeowners?
This varies from state to state and knowing the laws of the state will definitely help any loan modification business prosper and stay in business for a long period of time.
What type of license is required, if any, for a company to offer loan modification services?
Every state has its own requirements and for a loan modification business to be in compliance with the state licensing laws is a crucial part of staying in business. So yes, licensing is required in certain states and others not.
What are the penalties, if any, for a company who is operating in a state without the proper licensing?
The penalties can begin with a fine between $500 - $10,000 per case and suspension of business activities. Any cases thereafter can increase the fine and possibility include imprisonment.
If a homeowner is already in a loan modification plan can they reapply for another one if they fall behind?
Yes, but it all depends on who the lender is and when the original loan modification was completed. Most loan modifications are good between 6 to 12 months.
What is a deed in lieu of foreclosure?
Deed in Liew is a deed instrument in which a mortgagor (i.e., the borrower) conveys all interest in a real property to the mortgagee (i.e., the lender) to satisfy a loan that is in default and avoid foreclosure proceedings.
