What can be modified?
Principal, interest rate, payments, the length of the loan,
any late fees, attorney costs, accumulating interest and penalties.
What are the Time frames?
Default time frame of two to three months behind in your mortgage payments to qualify. Time frame for response to your modification request can be anywhere from 30 to 90 days or longer depending on the lender.
Are the Laws Different in Each State?
Yes. Each state has different regulations governing loan modifications, so it is important to check the laws in effect in your area before proceeding with your application. Your lender will also provide you information on the programs available to you in your state. HUD also has information on their website so you may want to visit their site at http://www.hud.gov/local/. I also recommend you consult with a foreclosure defense attorney, a foreclosure counselor or your mortgage broker to find out all options available to you.
What are the different types of modifications?
Do it yourself, non-profit or fee based. Non-profit help is available through government sponsored or based agencies such as HUD certified counselors. For a list of counselors, you can visit HUD’s website information listed above. Fee based from a profit counselor or foreclosure defense attorney can run anywhere from $1,500 upwards. It is common practice right now to charge consumers one or two months of your mortgage payments.
What is a forensic loan audit?
A forensic loan audit is a review of your loan to determine if there have been any RESPA or truth and lending violations or other predatory loan practices. A foreclosure defense attorney will be able to conduct the audit for you. This is especially important if a litigation action has been filed against you by the lender. Your attorney may be able to use this as a defense and may suggest that you have grounds to rescind the loan based upon violations in the truth and lending laws.
Why Would the Lender Agree to a Mortgage Modification?
The costs to foreclose and litigate on a property can cost them as much as $50,000. It makes more sense to negotiate with the homeowner to keep their home. However, if they can ensure a continuous revenue source that is locked in for say another 30 years, then it is clear that it is something they would prefer.
