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What exactly is a loan modification?
A loan modification is a change in terms of the existing mortgage note. Simply put, the lender can lower the monthly payment, interest rate, convert an ARM to a fixed rate, reduction of the principal balance, and defer past due mortgage payment to the end of the loan. Every loan modification is unique to the borrower’s circumstances and needs.
Why would my lender change my loan terms?
Banks and mortgage investors are not interested in owning your property. Regardless of how much equity you have (or don’t have), despite what you may have heard in the media, the last thing bank or mortgage investor wants is to own your home. Loan modifications are approved to keep families in their homes. Federal regulators require banks to keep reserve requirements for loan losses. When a loan goes into default, it turns into a non-performing asset, and the reserve requirement jumps to 125% of the loan amount. This hurts cash flow and the banks ability to operate. Banks (like Indy Mac Bank) fail because they do not have the necessary reserves to cover non-performing assets. This is another reason your bank may consider a modification. They have a vested interest in keeping your loan on the performing asset side of the balance sheet.
Would I qualify for a loan modification?
For starters, you must have the capacity to repay the loan, meaning you must have sufficient income to qualify for the new mortgage payment. Much like an FHA loan, you must show you have the ability to repay. Also, there must be a financial benefit to you and your family. It must be documented that it would improve your current circumstances.
We offer our clients a FREE consultation to determine if you might be a candidate for a loan modification. Call Keith Murphy at 1-800-764-0035 or email me at keith@lowerourrate.com and we can discus your specific circumstances in detail.
What experience do you have modifying mortgage loans?
Jim Richman
· Former H.U.D. Commissioner (FHA home loans are a H.U.D. product)
· President and founder of Richman & Associates Inc., a real estate and business debt restructuring firm specializing in foreclosure solutions and financial consulting.
· Former Senior Loan Officer with Coast Savings and Loan and Pacific Thrift and Loan.
· Former Burbank City Councilman and Mayor.
· Former board member of the American Red Cross.
· Former President (7 years) of NOVA, a sheltered workshop for the handicapped.
· Wrote weekly political column for THREE MAYOR newspapers.
· Published author of Foreclosure articles for Scotsman Guide, Mortgage Originator and Broker Banker Magazine, the three leading financial magazines in the lender industry. Read monthly by 125,000 mortgage brokers nationally.
· JIM is featured in Broker Banker Magazine as an expert in foreclosures. He is available on their website for questions from Mortgage Brokers or Homeowners on foreclosure. Follow this link: www.BrokerBanker.com and post your question at "ASK JIM".
· Broker Banker Magazine: (888) 324-5678 or visit brokerbanker.com
· Mortgage Originator: (216) 328-9452 or visit mortgageoriginator.com
· Scotsman Guide is FREE to brokers: (800) 297-6061 or visit scotsmanguide.com
Timothy G. McFarlin
- Attorney and California Real Estate Broker.
- Tim specializes in Real Estate Law and suing lenders for errors on loan documentation.
Erich Hench
- 25 YEARS OF BANKING EXPERIENCE.
· Former Vice President and Senior Financial Analyst for Pacific Thrift & Loan, responsible for all commercial loan underwriting, asset review and debt restructuring.
· Vice President of Topa Thrift & Loan.
Alicia Chapdjian
- Manager of our underwriting department
- 15 years of comprehensive experience in all aspects of mortgage lending.
WANT TO LEARN MORE? CLICK & WATCH PRESENTATION BELOW:
What is a Loan Modification.pdf
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