Frequently Asked Questions About Modifications – Nassau & Suffolk Counties, Long Island
Q: What Happens in a Mortgage Modification
The goal of mortgage modification is to make a homeowner’s mortgage more affordable in terms of the monthly mortgage payments. A modification is achieved by lowering the interest rate of the mortgage, lengthening the term of the mortgage, and potentially creating a lump sum payment at the end of the mortgage. The reduction of principle is also possible although lenders tend to be more hesitant to reduce principle while being more accommodating with methods that reduce the monthly payment. Also important with mortgage modification is the resolution of mortgage arrears, with arrears spread out through the loan which is being paid at a lower rate, thereby yielding a lower payment despite the higher principle created to include arrears. Also arrears are often put in the back of the loan so that they don’t raise the monthly payment amount.
Q: How Can a Mortgage Modification Help Me?
A mortgage modification can ideally help most homeowners struggling with their mortgage payments. It is intended to make the payments generally more affordable. However, a requirement to obtain a mortgage modification is a showing of hardship, so that a homeowner just looking for a lower rate, who is otherwise fine with their payments is not a candidate for modification.
Q: How Can I Obtain a Mortgage Modification?
To obtain a modification a homeowner needs to apply to their lender who will send them an application. The homeowner needs to fill out the application and send it with many documents to their lender. While this process theoretically sounds simple enough, in reality the modification process can be lengthy and frustrating in that lenders often give inconsistent information, lose documents, and are slow to respond. Many borrowers seeking a modification give up given the many possible delay tactics adopted by many of the mortgage lenders. To maximize your chances of getting a modification you should consider retaining law office such as ours with experience in the mortgage modification area.
Q: What Is the Difference Between HAMP Modifications and “In-House” Modifications?
A HAMP modification is per the Making Homes Affordable Program sponsored by the federal government where financial incentive is given to lenders to modify mortgages according to certain criteria. An “in-house” modification is usually directly from the lender according to their modification programs. A HAMP modification is usually more aggressive and can go down to a rate of 2% interest for the initial years of the modification. However, a HAMP modification also has more restrictions, because the program may not be available in certain situations. Both types of modification, however, are similar is seeking to make payments more affordable for struggling homeowners.
Q: What Are the Qualifications for a Modification?
Under HAMP there are more requirements to obtain a modification, while with the “in-house” modifications there is greater flexibility, depending on the particular bank and program. To qualify for a modification the homeowner must be considered to be “at risk” with serious hardship involving either loss of income, increase in expenses or “payment shock” (due to significant increases in their mortgage payments). The loan must be a 1st lien (although a second mortgage or equity loan can be modified, if the first mortgage was successfully modified) and the home must be owner occupied (although as of June 2012 rental properties can also qualify). Borrowers with equity loans and second mortgages are not disqualified. The loan must be in default or in imminent default. Borrowers can qualify whether delinquent or not, but must have enough income to handle modified payments. Lenders would lower mortgage payments exceeding 31% of gross income by dropping interest rates to as low as 2%, and if necessary, extending the loan term up to 40 years. The loan interest rate is usually the lowest initially and gradually increases to approximately 4% interest interest over several years. The amount of the mortgage can not exceed $729,750. for a single unit home and the loan must have been created before January 1, 2009. Mortgage holders who lower mortgage payments would get a financial incentive from the Federal government for modifying a loan.
Q: What if I Am Denied for a Modification?
If you are denied for a modification you should not despair, since most homeowners who have obtained modifications have tried several times over a prolonged period of time. However, now that you have experienced the potential harshness of this program, you may decide to improve your chances to obtain a modification, by being represented by local attorneys, such as our office that concentrate in helping clients obtain modifications.
Q: What if I Am Accepted for a Modification?
If you are accepted for a modification that you can sustain, congratulations! Consider yourself fortunate since many homeowners do not get accepted for a modification.If you have a second mortgage or home equity loan, now that you have modified your first mortgage, you will potentially qualify for a modification for such secondary mortgages or equity loans. However, now you need to make every effort to stay current with the modification. If you have high credit card bills or car payments that may interfere with your ability to stay current on the modification, you should consider a Chapter 7 bankruptcy case to eliminate burdensome debt that may interfere with your staying current under the modification. Also, because lenders are strict with modification compliance and can easily cancel an agreement based on lateness or even based on their own mistake or confusion, it is important to have documentation for the modification, even if it is confirming emails and letters, so that if there is any potential dispute you have documentation for the modification and for the dates and amounts of your payments.
How Can Our Law Office Help You with a Modification?
The Law Office of Ronald D. Weiss, P.C. regularly represents its clients in negotiating and obtaining mortgage loan modification. Our persistence, experience and ability to exercise other legal options, such as foreclosure defense, bankruptcy, and ability to more readily complain to government agencies help us to get more attention from your lender and allow us to have a high rate of success in obtaining modifications for our clients. At the end most lenders are concerned about the legal process in that many of them have been forced to settle and litigate many issues relating to their lending practices and are seeking to avoid additional legal complications. To have a better chance of obtaining a modification for you, we would also like to know about your past experience, if any, and if you were denied for the modification, the reason for the denial. Such information will help us structure a more effective future package to the lender. Since you have a limited opportunity to obtain a loan modification, you should give yourself the best chance to succeed in getting one.
Please call us at (631) 271-3737, or e-mail us at email@example.com for a free consultation to further inquire about our representing you in negotiating for a loan modification.