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How A Foreclosure Loan Modification Can Help You

If you are in a position where you are unable to make your monthly mortgage payments, you may be concerned on whether or not there are any options out there for you. As soon as you realize that you are not able to make a payment, you need to call your mortgage company. If your mortgage account is only due for one payment, they may advise you that there is nothing that they can do for you at the moment.

This is because most of their options are for people who are at least two, and sometimes three payments past due. This fact should not stop you from calling them anyways. Mortgage companies are more willing to work with people that are upfront and honest with them.

The absolute worst thing that a borrower could do is to not communicate with the lender, ignore all of their letters and phone calls, and then wait until the very last minute to ask for help to stop a foreclosure. Most of the lenders options need at least a few weeks in order to be approved and set in place.

The Loan Modification Option

Even though you may have tried to bring your account current, if you are facing past due payments of two or three, there may be an option for you to help out. Out of all of the options that a mortgage company could offer, the loan modification can be the best.

This is because once the request is accepted and the paperwork is done, the account is brought current right away. Along with the past due payments being brought current, the loan modification may give you a lower interest rate. And with a lower interest rate comes a lower monthly payment.

Another thing to consider is whether or not your mortgage company will require you to escrow your insurance and taxes, if it is not already. This will of course raise your payments slightly but it is an excellent way to avoid those large bills every year. There may also be a fee involved with the loan modification but it is not usually a lot and it is applied to your loan.

Information You Need To Have Ready

In order to apply for the loan modification there is going to be a lot of information that is needed by your mortgage lender. To start with, they will send you a hardship package that you will have to fill out. Make sure that you are taking your time with this as one mistake or one piece of missing information can tie the whole process up. You will have to have all of the requested information in before the department can proceed with the loan modification approval process.

Be prepared to fill out the entire loss mitigation package including your income, your expenses, and your hardship letter. The hardship letter is a simply letter that contains your name, address, loan number, and the reason for your previous financial hardship.

Some of the reasons that lenders would see as valid reasons for a hardship would be a death, loss of employment, medical illness, and major home repairs such as having to replace a furnace. You want to make sure that your hardship letter is clear and to the point but you do not want to sound like a robot in it either. You want to make sure that you are using some emotion in the letter.

The Process

You may be advised to continue to make at least one monthly payment while the loan modification is being reviewed for approval. In some cases, a repayment plan may be required that you can make payments on for two to three months. This helps to establish a better payment history on your account so that the loan modification can be approved easier.

Keep in mind that you will probably still receive some collection calls during the approval process. This is because the department that you will be working with is the loss mitigation department. But while you are working with them, the collection department will be allowed to continue to call you unless you are set up on a plan.

Things To Keep In Mind

It is important to keep a few things in mind. The loan modification is not something that is promised by the mortgage company. They may or may not approve your loan for the program so you want to make sure that you are doing everything they ask of you to do in order to better your odds. It is a privilege to be given a loan modification so remember that it is not something that is owed to you for having a loan with the lender.

Also, many mortgage companies limit the number of times any loan can receive a loan modification. This means that if they only allow two loan modifications per loan that is two loan modifications for the entire life of the loan. Whether it is a fifteen or thirty year mortgage, you are only allowed so many chances with this particular kind of help. You will also want to make sure that you staying on track once your account is brought current.

Accounts that fall past due right after they are brought current with a loan modification are not generally going to be on good terms with the mortgage company. It would be extremely hard to get your account approved for any further assistance if you fail behind right after being brought current with a loan modification.