Loan Modification FAQ
Loan modification has long been the solution of choice for homeowners trying to stop foreclosures and keep their homes. Unfortunately, applying for a loan modification is difficult and time consuming. Your biggest decision is whether to hire a foreclosure defense attorney, or attempt the loan modification process yourself. Towards this end, this loan modification FAQ helps you to answer some basic questions about loan modification. We strongly recommend experienced attorney representation for all mortgage and foreclosure related legal matters.
This is your home we are talking about, so don’t take chances! Making the right decisions regarding mortgage loan negotiations is crucial. It can mean the difference between losing your home to foreclosure and keeping it with affordable payments. Do your research, and hire an experienced foreclosure defense attorney! An experienced foreclosure defense attorney is in the best position to defend your rights, and get you the best results.
This Loan Modification FAQ guide gives you answers to some common questions about loan modification.
Loan Modification FAQ: Question #1: Can’t you just do it yourself?
ANSWER: Technically, you can, but it takes a lot more work than you think and the results probably won’t be the same. In short, it is not recommended. Many foreclosure defense attorneys report a high number of clients that first attempted the process themselves. Banks are aggressively defending their assets and have developed tactics which are designed to frustrate and wear down homeowners. It can be months of sending documents and information without any answers. You may be led to believe you are receiving a loan modification, only to be summoned to court or given a notice of sale. Alternatively, a loan modification attorney communicates directly with your lender’s decision makers, using legal strategies to get the best results. An experienced foreclosure defense attorney understands loan modification program guidelines, and what it takes to qualify for assistance.
Loan Modification FAQ: Question #2: Wouldn’t my lender rather foreclose than give me a loan modification?
ANSWER: In some cases, foreclosure is the more efficient option. However, lenders lose money with every foreclosure and can be required to increase their reserves. The banks already have the liabilities of too many properties and non-performing loans on their books. In many cases, lenders would much rather modify your mortgage loan to something affordable. Doing so allows them to convert your loan into a performing asset. Your foreclosure defense attorney has the job of convincing your lender of this choice.
Loan Modification FAQ: Question #3: Can a loan modification stop the foreclosure process?
ANSWER: Your chances of getting a loan modification diminish the longer you wait. Banks invest money in the foreclosure process and are reluctant to stop it without good cause. However, until your home is actually sold at auction, no one can force you to leave your home. A loan modification can stop the foreclosure process as close to a few days before the sale date. According to the Department of Justice Settlement, lenders are required to stop the foreclosure process upon receipt of a complete Request for Mortgage Assistance. Your lender is then required to suspend the foreclosure process until a formal decision is made. This buys your foreclosure defense attorney some time to work out a lasting solution with your lender.
Loan Modification FAQ: Question #4: Is loan modification an instant solution to mortgage problems?
ANSWER: Loan modifications really work, but they take time and the right expertise. The process typically takes anywhere from two to four months, depending on how far behind you are. However, you won’t have to worry about losing your home during the time your loan modification is being negotiated. You can speed up the process by submitting your paperwork on time and cooperating with your foreclosure defense attorney. A good foreclosure defense attorney also has tools to create legal leverage throughout the process, and defend your rights and interests.
Loan Modification FAQ: Question #5: Do you need good credit to qualify?
ANSWER:No. The most important factor is verifiable income. Income demonstrates your ability to maintain the payments going forward if a loan modification is granted. Your credit rating is not considered. Standard requirements vary from lender to lender, but the bottom line is that the loan modification should make financial sense to your bank. Your lender will want proof that falling behind was a temporary snag, and that you can afford to stay on track if they modify your loan. This means you should have a verifiable source of income and a valid case of hardship.
Loan Modification FAQ: Question #6: Are loan modification companies scams? I heard they take your money, but don’t do anything.
ANSWER: There are always unscrupulous people in any business. However, you can find legitimate foreclosure defense attorneys that will help you. Strong legislative measures on the state and federal level, as well as thorough regulatory actions by attorneys general and the FTC have really added legitimacy to the practice. Working closely with an experienced foreclosure attorney is crucial to a successful loan modification. You should thoroughly investigate the background of anyone who claims to be able to do a “loan modification” before you pay for services. The Federal Trade Commission (FTC) strictly prohibits any non-attorney organization from representing distressed homeowners. You can find the FTC’s video guide to avoiding foreclosure scams on our website.