Starting in 2007, during the Great Recession and crash of the housing market, people began to struggle with loan repayments and foreclosure rates soared. This has continued through present day and will be even worse during this next recession. People who were no longer able to pay their mortgages wanted to find some help. The idea of a loan modification was created to theoretically prevent foreclosure and help owners stay in their homes by making payments more affordable. Home owners wanted the terms of the loan to be more affordable. Theoretically, a loan modification helps with payments in this several ways such as through reducing interest rates, monthly payments or principal balances. In practice, this rarely happed during the Great Recession and it happens even less these days.
To begin the process of a loan modification, the simplest but sometimes most intimidating step in starting the process is to contact your lender and talk to them. It is critical to contact your lender before payments are late. After your payments start getting late, it is probably too late to do anything but sell your house, if you can sell it before the foreclosure is finished. Let your lender know what your financial situation is like and how you plan to correct the situation. Let them know what you’re able to pay back today and ask them what options are available to you. Different banks will have different criteria for qualifying for a loan modification, so it’s important to discuss your options and what you qualify for with your lender. When applying for a loan modification, it’s a good idea to get all the appropriate documentation ready as quickly as possible. Your lender will need to see evidence that you can’t maintain the current payments, but that you have the money to make a slightly lower payment. There are several documents that you can use to support this, and the more documentation you have, the easier it’ll be for your lender to make a quick decision. These documents include: bank statements, pay stubs, loan statements and agreements, total monthly income and sources and a monthly expense break down detailing all reoccurring costs (i.e. electricity, cell phones, etc).
Once you apply for a loan modification and provide the lender with all supporting documents there are two things you will be doing: waiting and keeping communication open. Oh, and did we say, waiting again? It can take a long time to process your application and get a response, sometimes you might not hear anything for several months. Often times, the lender will never respond. So, make sure whenever you speak with your lender you ask if there’s anything you need to be doing for your loan modification. For example, you might have to continue to make payments on time while the application is being processed to qualify. However, if they know you can do this, they most likely won’t give you a loan modification. Make sure to follow any instructions given to you to improve your chances of getting your loan modification. Being in debt and even just struggling to stay out of debt can be a very scary process. It’s easy to be embarrassed of intimidated to go to your lender and ask for help, but doing it yourself is better than getting a paying a phony third party mortgage modification company a huge fee and then finding out you aren’t going to get a loan modification anyway. Lenders aren’t actually scary people, it’s in their best interest to have you as a costumer and to continue to receive money off you. Heck a single foreclosure costs lender’s tens of thousands of dollars, which is reason enough for them to want to keep you there! But I digress, the decision to approve your loan modification has everything to do with the numbers on the paper (your financial situation) and nothing to do with who you are. Meaning by hiring someone to help, you’re creating a middle man that doesn’t need to be there and is costing you money out of pocket. A loan modification is a great tool to help struggling people get back on track with loan payments, if only most lenders agreed and would give you a loan modification. If you’re struggling to make payments, have negative equity or are about to foreclose, then it’s worth pursuing a loan modification. Explore all your options by talking to your lender about whether a loan modification is right for you. Just know that it is very unlikely that a lender will give you a loan modification, since they are extremely rare these days. Out of the hundreds of home owners we’ve seen apply for a loan modification, almost none at all actually received a loan modification, even though the lenders continually led them on. Perhaps the lender was just trying to get the borrowers updated financials before the foreclosure?
If you’ve tried a loan modification and it has been unsuccessful, or if you don’t want to let the bills continue to add up while the bank leads you on, we will buy your house today, no matter the situation or condition. Call (843) 553-5005 or fill out the seller form on our website today.