Mortgage Loan Modification

A Loan Modification is a permanent change in one or more of the terms of a mortgagor’s loan, allows the loan to be reinstated, and results in a payment the mortgagor can afford. A loan modification is usually a win-win situation: the lenders get their money in a reworked fashion and borrowers get a new chance to support their mortgage payments at a reduced cost.

If you are falling behind on your mortgage payments, do not hide from your lender. Instead, reach out to them for assistance. Your mortgage company would rather work with you than commence foreclosure proceedings, which can be quite costly for them.

Can a mortgagee qualify an asset for the Loan Modification option when the mortgagor is unemployed, the spouse is employed, but the spouse name is not on the mortgage?

Based upon this scenario, the mortgagee should conduct a financial review of the household income and expenses to determine if surplus income is sufficient to meet the new modified mortgage payment, but insufficient to pay back the arrearage. Once this process has been completed the mortgagee should then consult with their legal counsel to determine if the asset is eligible for a Loan Modification since the spouse is not on the original mortgage.

Who is eligible for loan modifications

Mortgage holders can qualify for one of two programs:

* Mortgage holders who are behind on their payments can apply for the “loan modification” program.
* Mortgage holders who have not missed payments but whose payments are more than 31 percent of their monthly income can apply for the “refinance” program. It is only available to people whose mortgages are held by Fannie Mae or Freddie Mac.

The government’s $75 billion foreclosure prevention plan is open for business. Homeowners struggling with mortgage payments can now take advantage of the new loan modifications programs.

Do you need professional help?

If you cannot negotiate mortgage loan modification on your own, an attorney or a loss mitigation specialist can communicate on your behalf. Your attorney should be one who has good service background and can ensure that you get a fast response from the lender. Any foreclosure action is stopped while the attorney negotiates with your lender.

If you have an adjustable rate mortgage that reset and you cannot meet the higher monthly payments, request a loan modification from the lender. They will request a complete financial history from you, detailing your income and monthly expenses. Ideally, you should have some cushion in your income to justify a loan modification, if they switched your mortgage to a fixed-rate mortgage. Show them that you can comfortably pay a fixed rate mortgage through extra income from a second job, and you are more likely to get a modification.