Loan Modification Corp :: Loan Modification Attorney Stop Foreclosure

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The primary purpose of loan modifications is to assist distressed borrowers who are unable to meet their mortgage obligations. Therefore, a loan modification, as opposed to a refinancing, enables a servicer to change the terms of a loan to better enable the borrower to stay current or cure a loan without retiring the existing loan. Loans can be modified by extending the amortization terms, adding balloon payments, decreasing the mortgage rates, forgiving principal or interest payments, and extending the fixed-rate period of a hybrid ARM loan, among other things.

This means the lender will make changes to the original loan. Those can be changes to your interest rate, payment schedule, loan balance, late charges, length of loan, pre-payment penalties, the handling of past-due payments, and the like. You do not have to be behind in payments to negotiate a Loan Modification.

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In the wake of 2007's rising foreclosure rates, the U.S. government negotiated with a series of mortgage-service companies to create a "Mortgage Rate Freeze" program to alleviate the financial strain of resetting interest rates for subprime borrowers in 2008. In theory, this program is designed to not only benefit a targeted group of homeowners but the economy as a whole by reducing foreclosures and, therefore, downward pressure on real estate prices. There is a wide range of estimates on the number of people this plan will help. As many as 1.2 million, estimated by the Mortgage Banker Association.

The obvious benefit of the rate-freeze plan is for subprime borrowers who are facing an interest-rate reset in 2008. This plan could freeze their payments for five years, providing a lot of breathing room for those facing a payment they cannot afford. Ideally, during this time, the homeowner will be able to build up enough equity, either through price appreciation or principal payments, to refinance at a lower rate, which generally requires the home owner to have about 20% equity in his or her home.

In this transaction, we will approach the lender with an offer to accept less than the full amount owed. Instead of the property being sold, we will refinance with a new lender. This will allow the homeowner to retain ownership of the property , while at the same time avoiding a foreclosure or possible bankruptcy . If you want to keep your home, but don't have enough equity to get into a foreclosure bailout loan, this might be our best solution for you. By letting us negotiate a reduced amount with your current lender, you can obtain a payoff of less than the full amount owed, and refinance your home with a new lender, and a better loan, while reducing the amount owed.

If you are behind in payments, a lender may agree to let you catch up by making extra payments each month. You would have to agree to make the normal monthly payment plus an extra amount for 6-18 months.

Example: Your monthly payment is $1,800. You are behind two months, or $3,600. Instead of foreclosing, the lender agrees to let you make payments of $2,400 for the next six months (6-month forbearance agreement). You would then go back to the normal payment of $1,800.

You get a loan with a different lender to replace the one you have. This will be impractical for most owners. A refinancing lender generally will loan no more than 70% of the value of the home. In today's falling market, home values are often less than the amount of the loan. HUD can possibly help. Watch out for penalties for paying off the present loan, usually six months of interest.

To sell your property you will incur roughly 8% sales costs, including Realtor's fees. And don't even THINK about trying to sell it yourself in today's market.

So deduct 8% from the value of your home. What's left is the amount you will have to pay off the loan. If it is not enough to pay the loan (and don't forget that the lender in many cases will want a penalty for paying the loan early), then you are in a position that is called "underwater" or "upside down." Both terms mean that you cannot sell the property, pay all expenses, and have enough to pay the loan in full. Thus you must resort to what is termed a "short sale."

This describes a situation above. The lender agrees to accept less in full payment of the existing loan. Sometimes the lender will ask the homeowner to contribute to the sale to lessen the amount the lender will lose.

Example: Your home is worth $300,000 but you owe $325,000. You get an offer of $300,000; after selling expenses, there would be only $275,000 left to pay off the loan. The lender agrees to take the $275,000 and write off the difference of $50,000 as a loss. Alternatively, the lender might agree to the sale only if you put $10,000 in at closing. So the lender's loss would only be $40,000.

Normally there is no taxable income due to forgiveness of debt as long as all the proceeds when you got your loan were used for the purchase of the home or to improve it. This is a complicated area however, and you should get advice from a qualified tax advisor.

Instead of foreclosing, the lender agrees to accept a deed from you. This saves the lender the time and cost to go through foreclosure, and keeps a foreclosure off your credit record. For technical reasons, this rarely occurs. Technically possible, but real life intrudes to make it impractical from the lender's viewpoint.

Personal bankruptcies are generally of two types. Chapter 7 cancels out all your unsecured debts (credit cards, hospital bills, charge cards, and the like), but does not apply to "secured" debts: home loans, auto loans, mobile home loans, etc. Back payments on these loans can be included. This takes about six months.

Chapter 13 bankruptcies are essentially repayment plans over 3-5 years. You show the bankruptcy court how much your unsecured debts add up to, and how much you can afford to pay each month. You then commit to making that payment for the life of the plan. When you finish, all your unsecured debt is paid.

Chapter 13 example: You have $25,000 of unsecured debt. You are also $5,000 behind on your home loan and an auto loan. Beyond your basic living expenses, you can afford to make payments of $200 a month toward the unsecured debt for five years.

If you make all the payments, totaling $12,000, at the end of five years your creditors must consider the whole $30,000 of debt paid in full. Creditors cancel the remaining balances. If you stop making payments however, the court can cancel the Chapter 13, and you are right back to where you started; you still owe the $30,000 minus what you have paid. There are estimates that 85% of individuals filing Chapter 13 bankruptcies are unable to complete them.

The court may decide to force the lender to modify your loan if you can show that you can't afford the current payments, but don't count on it. During either a Chapter 7 or a Chapter 13 bankruptcy proceeding, you must make current payments on your home loan or the lender can foreclose. You do not have to be behind in payments to negotiate a Loan Modification.

.Send Me Some FREE Information:

First Name:

We Negotiate For You!
Behind on Payments?
ARM Ready to Adjust?
No Equity to Sell or Refi?
Want to Avoid a Bankruptcy?
Need a Lower Payment?
Want to Save Your Home?

Last Name:

Phone:

Email:

Address:

City, State, Zip:

No Cost. No Obligation. Guaranteed Privacy.

You may have to fight back if the lender has filed a foreclosure suit. Or bring a suit against the lender in those states where the lender can foreclose outside of the courts, at a Trustee's Sale. Courts have held that a lender wishing to foreclose must prove that it owns the loan documents, and thus has the right to foreclose. Most are not the original lenders; the lender acquired the loan documents by assignment from a different lender. Therefore if called to account, the lender must be able to furnish proof of the assignment; not always easy to do.

Also, you may be the victim of fraud or predatory lending, and in some cases, both. A attorney skilled in this area of law can determine if you are in fact a victim of predatory lending. The Truth in Lending Act and RESPA federal laws and various state laws may protect you, and also act as a tool to stop foreclosure.

The Loan Modification industry is changing daily. We try to keep our clients updated as to what Lenders are looking for when Approving Loan Modifications. Although we do not think you should completely qualify or disqualify yourself based on this information, you can see the criteria we use to Pre-Qualify Homeowners here.Another tool we use to keep Homeowners informed is news video. We will be adding videos from our staff shortly, explaining the Loan Modification process, but in the meantime, see what has aired on ABC.What is the cost for a Loan Modification? Usually, its the second or third question, after "What is a loan modification?" or "Do I qualify for a Loan Modification?" But it may just be the very first question on a Homeowner's mind. Ater all, they are struggling just to make their payment. Our goal is to keep costs as low as possible. We have very aggressive pricing, payment options, and a 100% Money-Back Guarantee.

But "cost" becomes irrelevant if we can't get the job done. In an effort to boost our success ratio, we have aligned ourselves with a Nationwide Network of Attorneys that have expertise in this area. Through our proprietary network, your request for a Loan Modification will come from an Attorney or Law Firm in your state, maximizing our leverage to get the job done.

Note: Borrowers interested in refinancing their loans under the Financial Stability Plan received some additional guidance this week. The program is designed to assist homeowners whose loans are owned or guaranteed by Fannie Mae or Freddie Mac, who are current on their payments, and where the loan amount is no more than 105% of the value of the home. A website ( www.financialstability.gov ) provides guidance on how to determine if a particular loan is owned or guaranteed by Fannie or Freddie and whether the borrower may qualify under this program. Additional details of the program are expected over coming months.