Need a loan modification?

Ways to keep your house with a loan modification in Novi, MI

A loan modification is a loan term change made to an existing loan by the lender. The borrower may be unable to repay the original loan and often seeks help from either their lawyer or a settlement company. Some borrowers are eligible for government loan modifications as well.

How to negotiate a loan modification in Novi, MI

There are different types of loans. Loan modifications are common with secured lending, such as mortgages. A modification might happen during a settlement or potential foreclosure when the lender has concluded that it will be less costly for them than either one of those options. It’s not the same as forbearance agreements which provide temporary relief for people with temporary financial problems.

There are two kinds of professional help you can get when it comes to negotiating a loan modification. Settlement companies, which work on behalf of borrowers and focus primarily on reducing or alleviating debt by settling with creditors, represent the first type. Mortgage modification lawyers specialize in negotiations for those owners whose mortgages have gone into default and are threatened with foreclosure.

How does a loan modification work?

If you are experiencing financial hardship and your loan is not in default, contact the loan servicer to see if they will work with you. You can also talk to a certified housing counselor or an attorney about contacting lenders on behalf of borrowers who might be eligible for loan modifications because their homes have been abandoned due to foreclosure. The process starts by submitting documentation that verifies your income, expenses, living situation (including any roommates), property value, and other key details like whether or not there has been insurance coverage on the home since it was purchased.

What is a loan modification agreement?

A loan modification agreement is a written document that details the terms of your loan.  It will include the new monthly payment amount, and how long it will take you to repay the loan with this rate. The agreement should also state whether or not there are any fees associated with modifying your loan.  Loan modifications may change some items on an existing mortgage contract including interest rates, repayment periods, and any other financial aspects of your loan such as forbearance agreements for extra time to pay off what you owe without penalties if necessary. You need to carefully review all sections of the loan modification before agreeing so that you fully understand its effects on your finances going forward!

How to get a home modification loan approved?

There are many providers of home modification loans, and the requirements for approval vary from one lender to another. There are also second-lien lenders that specialize in rehabilitation loans with long amortization periods as well as industry specific types of financing like FHA 203K mortgages. Lenders use various criteria like credit scores, outstanding debt relative to income, arrears on previous mortgages or other debts and delinquencies within the last year. In addition to a thorough examination of your loan application, they may request evidence of recent employment or bills in their review process. Some lenders will also provide free consultations where you can bring specifics about your situation and get expert advice on what else needs to be done.

Who qualifies for a loan modification?

The guidelines for loan modification loans include not only people who are in danger of foreclosure, but also those who are underwater on their houses. A modification means that a change is made to the terms of repayment on your mortgage so that you can continue to make your scheduled payment and stay in your home despite financial hardship such as unemployment or illness.  One way to get a modification without actually defaulting is for the bank or lender to lower an interest rate from say 10% down to 5%. Underwater mortgages are where the homeowner owes more than the house is worth and would cause a depression if anyone would dare sell.

Loan modification denied what next?

It depends on how you decide to handle the denial. Some clients try to qualify for a government program instead of going through another modification process. The Prime Loan Modification Program is offered by many mortgage lenders and guaranteed by the federal government, so it can be worth looking into if you are denied a loan modification. Other clients simply put their house up for sale after being denied a loan modification, or make the decision not to live in it anymore because they know they will never be able to sell it with negative equity. Either way, keep an open mind about your situation and consider all your options before making any rash decisions that don’t work out in your favor down the line! Here at Babi Legal Group we can surely lend a hand!

What is HARP loan modification?

Answer: HARP modifications are a program by the U.S. Department of Housing and Urban Development for those who have mortgages that can’t be refinanced under today’s low interest rates to make certain they can continue to afford their homes until housing values recover. The HARP 2.0 legislation gave relief last year for people whose homes had dropped more than 20% in value since 2007, a significant minority of homeowners facing foreclosure because they can no longer meet monthly mortgage payments thanks to lower property values and stagnant incomes. HARP loans are available on loans below $729,750 in most metropolitan areas as well as most rural areas where home prices have not fallen significantly since 2007.