Newport Beach Homes – Harbor Realty

According to the HUD website, a Loan Modification is a permanent change in one or more of the terms of a mortgagor’s loan allowing the loan to be reinstated which in turn results in a payment the mortgagor can afford.  It is interesting to note that in most cases a homeowner in need for help will indeed qualify for a loan modification.  To ensure that you understand what a loan modification will actually do for you, consider the following facts:

• A loan modification is indicated when the original loan that is secured by a residence has terms that make it impossible for the homeowner to continue making the payments, thus risking the loss of the residence.
• Loan modifications are not the same as debt consolidations, refinancing loans, or even forbearances.  Instead, they are long term solutions for rising interest rates or other hardships that are threatening to overwhelm the budget of a homeowner.
• Loan modifications may be able to stop foreclosure proceedings and instead reinstate the loans as they are being modified.

There are some other facts that explain why lenders are actually in favor of working with borrowers legal specialists in order to negotiate equitable loan modifications.

• All or a portion of the outstanding principal and interest, past due escrow, late fees, and even costs may be rolled into the loan modification and thus will not be lost revenue to the lender.  Since they are spread over a long period of time, they do not pose a problem to the borrower.
• Modified mortgages may use a step rate approach or an extended term methodology to provide for the repayment of the due and past due funds.  The lower payments ensure the repayment by the borrower while to the lender the added time is actually money in the bank in terms of yet to be earned interest due.
• Foreclosure is avoided and even though banks routinely foreclose on properties and sell the homes to other buyers for a fraction of the price, the slowing housing market has made it difficult for banks to unload such properties and then recover any additional funds from the previous homeowners.  Loan modification is a fiscally much more attractive solution for any lender.
• A modified loan protects the credit rating of a borrower and it also helps lenders in showing less defaulting loans in their portfolio.  This, of course, makes a good impression when the financial institution is wooing potential investors.

Here are the requirements you must meet in order to be considered a good candidate for a loan modification process to be started on your behalf:

• You monthly mortgage payment must be affected by a verifiable reduction in income.
• It is required that you are currently employed or have another source of a stable and predictable monthly income that is provable.

Loan modification and loss mitigation sound intimidating to the average homeowner, but th e process is indeed simpler than you might think.  By following a prescribed action plan, the process can reach a successul conclusion in a relatively short time.

You will need the following documents to start the process rolling:

• Hardship letter – include dates, reason for delinquency, what you have done to attempt to work out the problem in the past.  Also include any supporting documents for hardship.
• Bank statements – last two (2) months.
• Proof of wages and salary – if employed, pay stubs for last two (2) years; if self-employed, 1040′s for the last two (2) years.
• Federal tax returns – first and second pages of returns including W-2′s for the last two (2) years.
• Rental agreement – if the loan modification is not for your primary residence.

If loan modification might be right for you or if you simply would like more information, please contact Harbor Realty

homes@HarborRealtyUSA.com

(949) 673-4400

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