Loan Modification FAQs

Real Estate Loan Modification Frequently Asked Questions

Below are some of the more frequently asked questions on real estate loan modifications, but first let's do a quick overview.

A real estate loan modification is a negotiation between a lender and a borrower or third party, where the existing loan terms are restructured without refinancing the loan. The rate and terms of your loan are restructured to fit your current financial situation.

How is it done? In these current market conditions, the banks and lenders have been mandated by President Bush to do everything they can to work out a payment plan with their borrowers. This is a great thing for today's borrowers especially for those who are running late on their payments or are having trouble making them on time.

The banks and lenders would rather take less money and keep ou in your home making a payment that you can afford, rather than go through the expense of foreclosing on the home, hiring a listing agent, rehabilitating a home, and letting it sit empty on the market for months, only to lose thousands in the process.

We currently work with almost every major lender and several small lenders and banks to secure a real estate loan modification to help them help you. In many cases we actually have taught smaller banks and lenders how to go about completing a real estate loan modification.

Within 24 hours after receiving your package, our legal team will contact your lender to notify them that they will be negotiating a loan modification on your behalf, or you can try it yourself. From than on, they or you if you try it yourself, will be working with you and your lender in order to find a solution to your mortgage problems

Trying it yourself can be a daunting task being that it can take over 20 hours on the phone to speak with your lender, and it will take longer than if you use our attorney based program. We have the lenders attention. We have request from the lender upfront, copies of your initial loan paperwork for review prior to submitting the real estate loan modification proposal. If your lender is out of compliance with dates or missed signatures on any of your paperwork, as many are, they will be advised by the attorney of their mistakes making it more likely the lender will cooperate rather than take the chance of being reported to the Department of Real Estate and Corporations for violations or face a lawsuit. The average borrower won't know what mistakes to look for and your file won't get the attention it deserves. You can also try H.O.P.E. NOW. They can try to negotiate the real estate loan modification for you free of charge, but again, they aren't attorneys, and their success rate is much lower than what it would be if you used an attorney.

Please take a moment and read the frequently asked questions below, and there are any other questions you may have, feel free to give me a call at 805-276-1942 or click here to fill in a few brief blanks by clicking here. There's a place on the questionnaire where you can write in a question or describe your scenario. I'll respond to you within 24-48 hours.

1. Are lenders willing to negotiate?

Absolutely. Lenders do not want to foreclose on homes unless they have no other alternative. If a realistic professional proposal that makes sense is presented, they are very open and receptive to the real estate loan modification process. They are interested in creating foreclosure solutions.

2. Who qualifies for a loan modification?

Anyone who can prove they are having a tough time. Especially those who are currently a few months behind, those with negative amortizing loans, those with loans that are about to adjust, those who are upside down on their loan, and those who would rather keep their home than do a short sale.

3. Why didn't my mortgage lender tell me about the real estate loan modification option?

Mortgage lenders are in the busines or originating and servicing loans. Modifications are not a priority, nor do they make any money for the banks. Staffing their departments to handle the modifications is also a last priority, so a deluge of phone calls to a thinly staffed department wouldn't work since the modifications take a ton of phone time to execute. The banks depend on their borrowers and third party negotiators to shoulder the bulk of the communication with the lender.

4. How come AMM, American Mortgage Modification representatives have more success?

AMM's specific attorneys have been doing hundreds of loan modifications every month, working with virtually every bank and lender. They have open lines of communication with most lenders, which gives them the ability to negotiate directly with the person who is in charge of making a decision on your loan. Finding the decision for you would be finding a needle in a haystack! We also create a professional legal file on your behalf which includes all of your financial data such as income, asets, expenses, and unexpected intangible expenses. We couple this with a full property analysis and package this together in a file that makes it easy for the lender to read and understand, allowing for a more comprehensive and quicker response than you would get through other forms of negotiation.

Also maybe is fear of a lawsuit if the lender doesn't negotiate in good faith with the attorney, but banks and lenders are much more responsive to attorneys than they would be with the actual homeowner or other third party negotiator.

5. How much does the real estate loan modification cost?

The costs associated with an attorney based loan modification through AMM, vary depending on the value of your property, the type of loan, the lender, and the number of loans held against your property. The modification cost usually comes close to equaling the same as about one to two months mortgage payment(s). Since every loan modification is different, it requires a varied amount of negotiation. After a quick consultation, we can help determine what the exact cost your loan modification will be. Our primary goal is helping homeowners who want to keep their homes, find a beneficial solution for their situation. We will work with you to ensure that we can obtain an affordable solution for your real estate loan modification needs.

6. What do you need from me to get started?

If our attorneys believe we can help you, then they will need some basic information about your current financial situation. This will better allow them to make an evaluation of just how they can help. They will contact you in order to gather some of your paperwork required in order to negotiate a successful loan modification. They will also determine the current value of your property and put together a professional proposal for your lender. Click here to get your loan modification process started.

7. Will I have to meet with my lender or deal with any of their paperwork?

No. As long as you use us, AMM, we will take care of all the paperwork and the negotiating. If you do it yourself, or use H.O.P.E. NOW you will be handling the bulk of the paperwork.

8. How long does the real estate loan modification process take?

Using AMM, it can be completed in as little as five days but usually takes 2-6 weeks depending on the lender, type of loan, and individual situation. Doing it yourself will take much longer since you aren't familiar with the process. I did one for my sister, without an attorney, that took over 100 days and 20 hours of phone time.

9. What paperwork do I need to complete the real estate loan modification process?

Our Client Authorization form, your most recent month's mortgage coupons/statements, your AMM payment information and any other corresponsence sent to you by your mortgage company and a completed AMM questionnairre form.

After we receive these items from you, we can begin your real estate loan modification process. Please contact us with any other questions or concerns. Remember that time is not on your side, so if you are having problems or struggling to keep up with rising mortgage payments, don't delay and call us immediately for a free and confidential consultation. We want to help you keep your home. Period!

10. By utilzing the real estate loan modification option to bring my mortgage current, can the mortgagee (lender) add all fees and corporate advances accured and made on my mortgage?

All or a portion of your Principle Interest taxes and insurance, may be added to your mortgage balance, except for foreclosure costs, late fees and other administrative expenses may not be added to your balance, you must pay those upfront prior to your modification, or you will be put on a payment plan approved by the lender to cover those specific expenses.

11. When utilizing a real estate loan modification, can a lender force an impound account for unpaid taxes, HOA dues, or homeowners insurance?

Yes they can. Lenders will force an impound account to be created for items, which if not paid, would create liens on the property which would be supercede the existing first mortgage (meaning the liens would be in first position ahead of the mortgage.)

12. Will HUD subordinate a partial claim (for FHA loans) , if I default on my mortgage loan and than subsequently qualify for a real estate loan modification?

Yes. HUD can subordinate the partial claim.

13. FHA loans- If my FHA loan qualifies for a real estate loan modification, am I eligible to get my mortgage insurance premium refund?

It depends upon when the closing date occurs for the new loan modification. For FHA loans funded after July 1st 1991 but before January 1 2001, the 7-year unearned premium refund schedule remains in effect. On or after January 1 2001, the 5 year refund schedule applies. On or after December 8 2004, refunds of upfront mortgage insurance are eliminated (you don't receive a refund) unless you go thru FHA and refinance to another FHA loan.

14. Can I qualify for a real estate loan modification when I'm unemployed, but my spouse is employed, but the spouses name is not on the mortgage?

This is a difficult question to answer. In short, it depends on the lender. We would call ahead and get guidance from your lender on whether or not it's possible.

15. Are there any guarantees on the outcome of my loan modification?

No. It would be impossible for us to guarantee that some other entity (the lender) will do what we suggest that they do. We can say we have a VERY high success rate in obtaining a modification for our past clients. Click here to get your real estate loan modification started.

16. How does a real estate loan modification affect my credit?

If we are successful in obtaining a real estate loan modification for you, the loan will from that point forward, be reported as being paid as agreed. Assuming you make all your payments on time, you may see your credit begin to get better over time. Obtaining a real estate loan modification is the least damaging to your credit when compared with a short sale or a foreclosure.

17. Will having a loan modification affect my taxes?

We can't answer that question since we don't have a CPA license, therefore we can't offer you tax advise. We suggest you check with your tax professional.

18. Do I have to be behind on my mortgage to qualify for a real estate loan modification?

No. Although falling behind on your mortgage payments is an obvious indicator of financial hardship. Some clients are forced to use reserves or credit cards to keep their mortgage payments current. In this situation it is only a matter of time before they fall behind. If an obvious fanancial hardship exists, a real estate loan modification may be possible although payments are current.

19. Do I have to owe more than my house is worth to qualify?

No. The basic formula is to have less than 20% equity in your home. The less equity you have in your home, the more the lender stands to lose in a foreclosure situation. If you have negative equity that is even more incentive for your lender to work with us.

20. Can I have my 1st and 2nd mortgage combined?

Maybe. In some cases where the first and second mortgage are with the same lender, that lender may elect to combine both mortgages into one. Keep in mind if the loans are with two different lenders, a combined mortgage outcome is very unlikely.

21. Im about to file bankruptcy, is it too late?

No. If you are currently in bankruptcy and your property is not included in your bankruptcy and you meet all other qualifications, you are eligible immediately. If your property is included in your bankruptcy you may be able to ask your bankruptcy attorney to remove it from the bankruptcy. Keep in mind your bankruptcy attorney may charge an additional fee for the service to pull the property out of your bankruptcy.

22. I already have a sale date for my home, can I still save my home?

Yes. Traditionally we need a minimum of ten days prior to the sale date to be able to achieve a postponement of the sale. In some cases we are able to postpone the sale as late as the day before. Keep in mind the longer you wait the harder it is to save your home! Click here to get your real estate loan modification started!

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