Q: What is a Loan Modification?

A loan modification is a negotiation between a borrower and a lender for new rates, terms, or lower loan amounts for the purpose of making a mortgage payment more affordable or saving a home from foreclosure.

Q: Can I do a loan modification if Im in foreclosure?

Yes - A Comprehensive Loan Audit will be your first line of defense against a foreclosure. Time is of the essence, but there are special circumstances that will allow our legal department to take advantage of to buy enough time so that we can analyze your current scenario.

Q: I AM NOT IN FORECLOSURE, CAN I STILL LOWER MY PAYMENT?

Yes, in many cases, this is easier because you have maintained your good credit with your lender. If your ARM is getting too high, we can help lower and fix the payment and interest rate.

Recent updates with the Making Home Affordable plan may allow for up to 9 million Americans to modify their current mortgage if they meet certain criteria.

Q: Ive already failed at my own loan modification, how can you help?

Guaranteed Loan Modification has a full-time team of legal experts who are familiar with the regulatory laws and potential predatory lending violations that your bank may not have shared with you for obvious reasons.

Having relationships with the right contacts at each bank also helps us quickly navigate through the noise so that we can present our case to the people who have the power to make final decisions about your home loan workout.

Q: How do I qualify for a loan modification?

Part of successfully negotiating a loan modification requires proving to the lender that you have the ability to meet the terms of the new agreement. This may include verifying that you have a steady source of income that will cover your total monthly budget as disclosed on your loan modification worksheet.

Banks also require a hardship letter that explains the circumstances which may be factors in why you are unable to make the current mortgage payments.

Q: How will this effect my credit?

A loan modification will improve your credit because the lender will start reporting your current payment history as on time vs past due.

Making your future mortgage payments on time will benefit your credit score.

Q: Why would my lender prefer a loan modification vs a foreclosure?

A foreclosure is a very timely and expensive process. By negotiating new terms or a principle reduction for the current homeowner, the lender avoids having to take possession of a property that may require additional rehab work and maintenance costs while it sits on the market for several months waiting to sell.

Basically, it is more expensive to foreclose in most cases than it is to negotiate with a current homeowner.

Q: What terms can I expect from my modified loan?

No two loans, banks or borrowers are exactly alike, so there is a huge variation in loan modification results.

On one end of the spectrum, the bank may only agree to bring the loan current and add the late payments onto the balance.

Best case scenario, the lender reduces your monthly payment to an amount you can afford. To accomplish this they may reduce your interest rate, extend the length of time you have to payback the loan, or agree to a loan forbearance an a portion of your principle balance.

Q: Who qualifies for a loan modification?

More people qualify for a home loan modification than you might think. Consider this; anyone having trouble paying their mortgage is a potential candidate for loan modification.

Especially good candidates are homeowners with adjustable rate mortgages, high interest rates or homeowners who are upside downin other words, they owe more on their home than they are worth.

Candidates with any kind of hardships are also ideal candidates. The list of qualifying hardships is too long to list here but it includes reduced hours at work, job loss, divorce and illness.

Q: Can the bank require an interior inspection of the property if they have concerns about the property condition?

Yes, the lender may conduct any review it deems necessary to verify that the property does not have physical conditions which might adversely impact the value.

Q: Can the lender include late charges in the Loan Modification?

Per HUD, the accrued late charges should be waived by the lender at the time of the loan workout. This varies depending on the type of loan, but always request a complete breakdown and description of all fees and penalties from your lender.

Q: What are a Good Faith Estimate and the Truth-in-Lending Disclosure Statement?

Within three days of receiving your loan application, the lender must provide you with the Good Faith Estimate -an estimate of the final closing costs to be paid at the time the loan is funded.

The lender must also provide you with the Truth-in-Lending Disclosure Statement - your estimated monthly payment and the APR of your loan. It is important to carefully review these documents and compare them with the final loan documents on the day of closing before signing the final loan documents.

Truth-in-Lending and Good Faith Estimate discrepancies are common violations our team of attorneys find in a Comprehensive Loan Audit Report .

Q: What is APR (Annual Percentage Rate)?

APR is an annual percentage rate that represents the complete annual cost of your mortgage loan. This means that, in addition to the interest charged on the loan, all other costs such as, discount points, appraisal and credit report fees, processing and document fees, are calculated into your APR or Annual Percentage Rate. Having Annual Percentage Rates on loans makes it easier for the borrower to compare the complete cost of similar loans.

Q: What is LTV or Loan to Value?

The LTV or Loan to Value ratio, is the amount of your loan compared to the appraised value of your property. This ratio directly affects the loan programs and rates you will be eligible for. Lenders will offer better loan programs and rates to borrowers with lower LTV ratios.

The current Making Home Affordable Loan Modification plan outlined by the Obama administration only allows for a maximum of 105% LTV.

Q: What is PITI?

PITI stands for Principal, Interest, Taxes and Insurance. Your monthly payment is principal and interest and often also taxes and insurance, depending on whether or not the lender requires them to be paid with your loan payment.

Q: What is Private Mortgage Insurance (PMI)?

This is insurance that protects the lender in case the borrower defaults on the loan. It is generally required by a lender if the down payment is under 20% of the loan or the LTV is 80% or more.