Tag: loan modification

Will a Loan Modification Lower Our Payments?

Posted on by admin

Will a Loan Modification Lower Our Payments?

If you’re looking to alter your mortgage payment or you need some form of a loan modification, you’re probably wondering what it is, how it can help, and what this means for your credit and your finances moving forward. One of the common questions I get is will a loan modification lower your payments?

Loan modification

A loan modification is a modification or a change to the original terms of your mortgage. If you’ve had a financial hardship or if you have a high risk of losing your home based on medical bills, job loss, or financial change, your lender may allow you to modify your existing mortgage. The goal is to reduce the monthly payment for a time or permanently in order to keep you in the home until things get better.

There are several different directions for loan modifications.

Principal reduction – This is where your lender will eliminate a portion of the debt allowing you to repay less than you originally borrowed. Your lender will recalculate monthly payments based on a decreased balance. Most lenders are very reluctant to do this so you’re likely to have them alter other features of the loan instead of lowering your principal amount.

Lower interest rate – Your lender may reduce your current interest rate. This can also reduce your monthly mortgage payments and save you money over time. Sometimes these rates are temporary or they can be negotiated to be permanent for the life of the loan or Intel the borrower refinances or sells the property.

Extended terms – This is where your lender will extend how many years you have to pay the loan back. This will lower your monthly interest rate but it will be more costly over time since you be paying more in interest. This option is also referred to as a re-amortization.

Fixed-rate – Your lender may switch you from an adjustable-rate mortgage to a fixed-rate loan in order to keep you in the home and keep the monthly payments the same rather than going up or down based on the interest rates.

Postpone payments – Your lender may allow you to skip a few payments, which is a good temporary solution if you have a job change, job loss, or you have medical expenses that need to be paid first.

What happens if your lender refuses to talk to you about a loan modification? Contact our office today. We handle a lot of different cases with mortgage modification and loan modifications to keep you in your home and keep your payments low.

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Why Do Mortgage Investors Deny Loan Modifications

Posted on by Jonathan Smith

Why Do Mortgage Investors Deny Loan ModificationsWhy Do Mortgage Investors Deny Loan Modifications

The care of your loan is much more complicated than it appears. To some, this may sound funny because many of us do not think of a mortgage as simple on any level. Usually, when making your monthly payments you only deal with the servicer. They are responsible for taking payments, crediting the accounts, and taking the steps for foreclosure if the loan is in default. There is another party involved in your loan you may not be aware of.

This other party is generally invisible to loan holders because they do not communicate with you. This silent party has the biggest stake in what happens in your mortgage and that is the investor. They own the mortgage and earn a profit on the interest paid. Many homeowners don’t realize there is another party involved with the mortgage until there is a financial hardship and payments have not been made when the servicer relays information that the investor will not allow modification.

So why would an investor deny an attempt to make a new payment agreement through modification?

The modification of a loan requires the permanent change of one or more of the loan terms. Some of those changes may come in the form of lowered interest rates, longer loan terms, principal reduced, and lowered monthly payments. All of these things can mean less money for the investor.

Usually, when an investor denies the request for modification it is because they believe they can make more money if they foreclose on the loan instead of modifying. Making money is the reason the investor owns the loan and it is strictly business so they are going to look for the option to make more money.

If you have a Fannie Mae or Freddie Mac loan or your lender is another GSE they are required to let the servicer consider you for the government’s Home Affordable Modification Program more popularly referred to as HAMP. Other big banks that received government funds in the big bailout are also required to consider homeowners for HAMP.

Private investors, however, can play by a different set of rules and it can be more difficult to get a modification from them. They are not bound to the government requirements so when and if they give a modification it can be less helpful.

What can you do if your mortgage investor has denied your loan modification?

Get the help of an experienced attorney that deals in loan modifications. Usually, when you speak with the servicer you may be speaking with someone that does not know all the programs available out there or your rights as a homeowner. There is so much information to know about the modification process and the best thing you can do is to have an experienced loan modification attorney on your side who knows all the information and can help you get the best results.

Being denied a modification does not have to be the end of your attempt to stay in your home. You can reapply after rejection. For more information on how legal representation can help with your modification please contact the team at Advantage Legal Group.

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