If you’re in the market for a loan modification you have a number of different options at your disposal. It’s important to keep in mind that with so many people clamoring to get a loan modification and avoid foreclosure, there are also those who are looking to prey on those who are desperate to reduce the monthly cost of their mortgage. So you should make a careful assessment of all your loan modification options.
Here is a primer on the types of loan modification firms working today.
Loan Modification Law Offices
A mortgage is a legal document and given the amount of legal particulars that are involved with renegotiating that contract, some homeowners choose to hire a real estate attorney to handle the modification. Though lawyers can handle the paperwork associated with a loan modification, it’s not always the case that an attorney will be able to secure the best possible deal for a modification. In addition, a lawyer may charge additional fees for processing. Make sure that the attorney has experience with a variety of modifications and doesn’t mainly have experience with other wings of the mortgage industry.
Mortgage Companies
This is an obvious choice for a loan modification, but don’t necessarily assume that a lender will be able to process a modification with limited fees. In fact, some mortgage companies outsource processing of the loan to another company, so you could be charged additional fees on top of the restructuring of the mortgage. As a loan modification will take into account your credit rating, it’s possible for one lender to offer better rates than another. This is especially true for lenders that may be more risk-averse due to the financial downturn. So do some research into the lender’s recent history as well as how the modification will be processed.
Loan Modification Processors
Loan modification processing is sometimes a trickier option to identify because there are times when a lender is referred to as a processor, even though strict loan processing is another avenue entirely. Loan processing both work with packaging loans to investors, as well as handling the paperwork associated with a modification – including processing payment – without lending any of the actual money. As mentioned above regarding mortgage lenders, this can be an extra step in the process that can be more costly.
A Loan Modification Company
Certain entities help negotiate contracts with mortgage lenders or modification services to get the best rate on a loan modification available. Each case is different and will need to be handled on a case by case basis in terms of where to secure the loan. This depends on the real estate market in a homeowner’s location and that homeowner’s financial and credit history. Basically, what this means is that the loan modification negotiator manages takes into account all of the above issues – which can be fairly overwhelming to the average homeowner – and tries to secure a modification with the best terms available, whether that’s going straight to a lender or working with a loan modification processor.
The advantage of working with a company that specializes in loan modifications is just that: they’re main business is dealing with the loan modification industry, rather than a lender that may have limited experience with modifications and may be spread thin with other types of mortgage plans. This is why going with a firm that is loan modification-specific is a good route to take.
Showing posts with label LOAN MODIFICATION. Show all posts
Showing posts with label LOAN MODIFICATION. Show all posts
Monday, June 8, 2009
Seven Steps to a Loan Modification
The easiest way to get a loan modification is to hire a loan modification specialist who understands the ins and outs of the loan modification system – including recent changes that may affect your eligibility. Even if you do work with a specialist, it’s still highly important for you to understand the process so when a modification specialist requires documentation, you’ll understand why it is necessary. Additionally, knowing what documentation you need will help the modification process go more smoothly. If you’re already three months late on mortgage payments or more, you’re going to want the loan modification to be approved as quickly as possible.
Step One: Determine Your Financial Situation. You will have some idea about your inability to make mortgage payments based on the money you have in the bank and your current income, but you need more than a general sense to process an application. Complete a financial audit of your current situation – down to small purchases, like cups of coffee. This is similar to determining your debt to income ratio when you first applied for a mortgage.
Step Two: Write a Hardship Letter. With the resulting figures of step one, write a letter that is no longer than two pages outlining why you are unable to make payment. Some excuses for not making payment are better than others. For example, recent unemployment is more persuasive than you have sizable gambling debts. You can’t overstate your financial situation because everything needs to be documented, as in step three.
Step Three: Gather Together Documentation. Everything has to be in writing. You’ll need to provide pay stubs, a W-2 form if employed, a 1040 form if self-employed, your mortgage statement, and property tax statements. Other issues, such as necessary expenses (utilities, day care, etc.) should also be provided.
Step Four: Contact Your Lender. You can send your hardship letter directly to determine if your lender is amenable to processing a modification. Like refinancing, you may need to look for a modification through another source as well.
Step Five: Fill Out Paperwork. A lender or other loan modification company will need you to input all the information you’ve received in the above steps. Leave no financial stone unturned. The idea is not just to prove that you’re on financially shaky ground, but that you’ll be able to meet the terms of a new mortgage. So don’t only emphasize your hardship, emphasize how you will actively pay off the mortgage as well.
Step Six: Get it in Writing. You’ll hopefully receive the written agreement from the lender approving your modification – if everything goes right.
Step Seven: The Stop Gap Repayment Plan. When you accept a lender’s offer, you will need to go through a stop gap program for a maximum of 60 while the lender reviews your records. This is when the lender does the full audit of your records before the loan modification can take effect.
Do you trust yourself to be able to perform all of these steps? Do you think you can draft a professional and effective cover letter. Problems arise when people try to do a do it yourself loan modification. This can lead to a modification proposal being denied even if the homeowner qualifies. Every “i” has to be dotted and “t” crossed, so it is a good idea to hire a mediator to walk you through the process.
Step One: Determine Your Financial Situation. You will have some idea about your inability to make mortgage payments based on the money you have in the bank and your current income, but you need more than a general sense to process an application. Complete a financial audit of your current situation – down to small purchases, like cups of coffee. This is similar to determining your debt to income ratio when you first applied for a mortgage.
Step Two: Write a Hardship Letter. With the resulting figures of step one, write a letter that is no longer than two pages outlining why you are unable to make payment. Some excuses for not making payment are better than others. For example, recent unemployment is more persuasive than you have sizable gambling debts. You can’t overstate your financial situation because everything needs to be documented, as in step three.
Step Three: Gather Together Documentation. Everything has to be in writing. You’ll need to provide pay stubs, a W-2 form if employed, a 1040 form if self-employed, your mortgage statement, and property tax statements. Other issues, such as necessary expenses (utilities, day care, etc.) should also be provided.
Step Four: Contact Your Lender. You can send your hardship letter directly to determine if your lender is amenable to processing a modification. Like refinancing, you may need to look for a modification through another source as well.
Step Five: Fill Out Paperwork. A lender or other loan modification company will need you to input all the information you’ve received in the above steps. Leave no financial stone unturned. The idea is not just to prove that you’re on financially shaky ground, but that you’ll be able to meet the terms of a new mortgage. So don’t only emphasize your hardship, emphasize how you will actively pay off the mortgage as well.
Step Six: Get it in Writing. You’ll hopefully receive the written agreement from the lender approving your modification – if everything goes right.
Step Seven: The Stop Gap Repayment Plan. When you accept a lender’s offer, you will need to go through a stop gap program for a maximum of 60 while the lender reviews your records. This is when the lender does the full audit of your records before the loan modification can take effect.
Do you trust yourself to be able to perform all of these steps? Do you think you can draft a professional and effective cover letter. Problems arise when people try to do a do it yourself loan modification. This can lead to a modification proposal being denied even if the homeowner qualifies. Every “i” has to be dotted and “t” crossed, so it is a good idea to hire a mediator to walk you through the process.
What is a second mortgage loan?
A second mortgage loan is based primarily upon these two conditions. A mortgage loan can be broadly understood as a kind of contract or a legal agreement, in which the borrower's property is pledged as a security or collateral guarantee, and the borrowed amount or credit is generally repaid in small packets of predefined amount, which are also referred to as installments. As per the contract or the agreement, the buyer promises to repay the principal amount or the actual loan amount, and its interest, over a fixed period, also known as loan tenure in a regular and orderly manner. A lien is understood as a legal right or a claim imposed by the creditor or lender upon the property, against which the credit is taken or borrowed. In a simple language a lien means the creditor has a legal right to dispose off the debtor’s property, in case of defaults or the debtor’s inability to pay the loan installments.
A second mortgage is an additional mortgage loan, which is added to your first or original mortgage loan. Since the new mortgage loan is attached in conjunction to the first or original mortgage, it’s generally referred to as a second mortgage loan – second because it falls at number two position in relation to the main mortgage loan. This second mortgage loan has all the characteristics of its original or main loan. In short, you’ve a condition in which two mortgage loans remain side-by-side, each loan with its unique set or terms and conditions.
Why avail a second mortgage loan?
Now, if two loans are to share the same mortgage, i.e. the same security or collateral guarantee, what’s the need of going in for a second mortgage? The answer’s quite simple. When people go in for a mortgage loan, they understand the significance and the importance of a lien. Debtors know for sure, if they default, or end up with unforeseen circumstances and are unable to pay off their dues, the creditor holds a legal right to sell of the house offered as security and recover the dues. So individuals are very cautious about secured loans, and generally avail just enough credit to satisfy their requirements. As a result, the full potential of the lien is not utilized. It means if the property is worth $1,00,000/- a mortgage facility of $40,000/- or $50,000/- is generally availed against the security. The remaining potential is left unused. That’s where a second mortgage comes in. If the borrower desires additional cash, or has a need to finance some requirement, the unused potential left over from the first mortgage activity can be used for the additional mortgage. Due to this, the second mortgage is also referred to as a home equity loan. The two terminologies can be used in lieu of each other.
Advantages of a second mortgage loan
•The homeowners have to pay a smaller down payment, and in some cases, the down payment is totally avoided, to avail the additional credit. During the transaction, the homeowner has the option to break up the total loan amount into two separate loans referred to as a combo loan. The encumbrance or the risk factor is distributed between the two loans, allowing higher combined loan-to-values and a much lower blended interest rates.
•The additional funds can provide a homeowner with much needed cash to improve the quality of their home or pay off high-interest loans. The biggest advantage is it’s possible to avoid a refinance of the existing first mortgage.
•Second mortgage helps homeowners to avoid paying PMI, or private mortgage insurance. The resultant savings can be substantial depending upon the loan break down, and often saves the homeowner hundreds of dollars a month, in terms of additional expenses. If the first loan is kept at or below 80% loan-to-value, the additional PMI is not required to be paid.
•The monthly payments on the second mortgages are ideally low as compared to its first mortgage. The homeowners end up with a substantial amount of liquidity, which can be used to pay of existing loans or even finance a commercial project.
•The second mortgage is offered for both adjustable and fixed-rate options, so many options are available to choose from and to find the exact credit facility to fulfill your needs.
A second mortgage is an additional mortgage loan, which is added to your first or original mortgage loan. Since the new mortgage loan is attached in conjunction to the first or original mortgage, it’s generally referred to as a second mortgage loan – second because it falls at number two position in relation to the main mortgage loan. This second mortgage loan has all the characteristics of its original or main loan. In short, you’ve a condition in which two mortgage loans remain side-by-side, each loan with its unique set or terms and conditions.
Why avail a second mortgage loan?
Now, if two loans are to share the same mortgage, i.e. the same security or collateral guarantee, what’s the need of going in for a second mortgage? The answer’s quite simple. When people go in for a mortgage loan, they understand the significance and the importance of a lien. Debtors know for sure, if they default, or end up with unforeseen circumstances and are unable to pay off their dues, the creditor holds a legal right to sell of the house offered as security and recover the dues. So individuals are very cautious about secured loans, and generally avail just enough credit to satisfy their requirements. As a result, the full potential of the lien is not utilized. It means if the property is worth $1,00,000/- a mortgage facility of $40,000/- or $50,000/- is generally availed against the security. The remaining potential is left unused. That’s where a second mortgage comes in. If the borrower desires additional cash, or has a need to finance some requirement, the unused potential left over from the first mortgage activity can be used for the additional mortgage. Due to this, the second mortgage is also referred to as a home equity loan. The two terminologies can be used in lieu of each other.
Advantages of a second mortgage loan
•The homeowners have to pay a smaller down payment, and in some cases, the down payment is totally avoided, to avail the additional credit. During the transaction, the homeowner has the option to break up the total loan amount into two separate loans referred to as a combo loan. The encumbrance or the risk factor is distributed between the two loans, allowing higher combined loan-to-values and a much lower blended interest rates.
•The additional funds can provide a homeowner with much needed cash to improve the quality of their home or pay off high-interest loans. The biggest advantage is it’s possible to avoid a refinance of the existing first mortgage.
•Second mortgage helps homeowners to avoid paying PMI, or private mortgage insurance. The resultant savings can be substantial depending upon the loan break down, and often saves the homeowner hundreds of dollars a month, in terms of additional expenses. If the first loan is kept at or below 80% loan-to-value, the additional PMI is not required to be paid.
•The monthly payments on the second mortgages are ideally low as compared to its first mortgage. The homeowners end up with a substantial amount of liquidity, which can be used to pay of existing loans or even finance a commercial project.
•The second mortgage is offered for both adjustable and fixed-rate options, so many options are available to choose from and to find the exact credit facility to fulfill your needs.
Loan Modification Help Center
FDIC loan modification is a federal program established in January of this year (2009) for all mortgages. It is said to be a way to help individuals recover from the bad economy and help them in reducing their mortgage payment by loan modification.
How it Works
The first step in achieving a Federal loan modification is to put a cap on your current interest rate. This is based on your expenses and your steady income. The term “cap” means that it will be the highest rate you pay during the term of your mortgage. The first five years of your loan will receive a reduced interest rate. After these 5 years you will notice a slow increase of about 1% of your interest rate every year, until your cap is met.
FDIC loan modification will also help to extend your mortgage term in order to lower your payments and payout your loan on an extended time period. The normal extension period is 10 years. This can reduce ones mortgage greatly. Keep in mind, when your loan matures you will be faced with a balloon payment that is quite robust
FDIC Facts
The FDIC will only allow 30-year fixed loan rates. A loan modification attorney can help to peruse through all of the paperwork to assure you are making the correct judgment. The federal loan will also look at the family’s future income to make sure they will receive the payment in full when the mortgage matures. In order to qualify for a FDIC loan modification, you must have the permission of both the borrower and the lender. You must submit to the lender two pay stubs of your current income and tax transcripts. The most important thing to remember is that you must make all these modification payments on time, no matter what.
You must contact your lender to see if they participate in this new loan modification program and if they can provide the loan modification help you need. You must use your current lender. If your foreclosure has already begun, you may still contact your lender regarding a loan modification, but you must do this in a timely manner, remember time is ticking by on your foreclosure. If you have recently filed for a state of bankruptcy, you will not be able to participate in a loan modification program. If you have a first and second loan, you are eligible for a FDIC loan modification; this is another reason to have a professional go over all the rules and regulations of the loan modification process. Going through the paperwork to assure you are eligible when having a first and second loan is exceedingly recommended.
The FDIC has created this substantial program to help individuals threatened by foreclosure. It is quite effective if you contact a loan modification lawyer and receive the information that will be required during the loan modification process. California loan modifications happen every day and homes are saved quite frequently. Loan modification advice is the best step you can take in finding out if FDIC loan modification is for you.
How it Works
The first step in achieving a Federal loan modification is to put a cap on your current interest rate. This is based on your expenses and your steady income. The term “cap” means that it will be the highest rate you pay during the term of your mortgage. The first five years of your loan will receive a reduced interest rate. After these 5 years you will notice a slow increase of about 1% of your interest rate every year, until your cap is met.
FDIC loan modification will also help to extend your mortgage term in order to lower your payments and payout your loan on an extended time period. The normal extension period is 10 years. This can reduce ones mortgage greatly. Keep in mind, when your loan matures you will be faced with a balloon payment that is quite robust
FDIC Facts
The FDIC will only allow 30-year fixed loan rates. A loan modification attorney can help to peruse through all of the paperwork to assure you are making the correct judgment. The federal loan will also look at the family’s future income to make sure they will receive the payment in full when the mortgage matures. In order to qualify for a FDIC loan modification, you must have the permission of both the borrower and the lender. You must submit to the lender two pay stubs of your current income and tax transcripts. The most important thing to remember is that you must make all these modification payments on time, no matter what.
You must contact your lender to see if they participate in this new loan modification program and if they can provide the loan modification help you need. You must use your current lender. If your foreclosure has already begun, you may still contact your lender regarding a loan modification, but you must do this in a timely manner, remember time is ticking by on your foreclosure. If you have recently filed for a state of bankruptcy, you will not be able to participate in a loan modification program. If you have a first and second loan, you are eligible for a FDIC loan modification; this is another reason to have a professional go over all the rules and regulations of the loan modification process. Going through the paperwork to assure you are eligible when having a first and second loan is exceedingly recommended.
The FDIC has created this substantial program to help individuals threatened by foreclosure. It is quite effective if you contact a loan modification lawyer and receive the information that will be required during the loan modification process. California loan modifications happen every day and homes are saved quite frequently. Loan modification advice is the best step you can take in finding out if FDIC loan modification is for you.
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