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What is a Loan Modification? A Loan Modification is when you and your Lender(s) have agreed (in writing) to lower your payment/interest rate &/or make some other type of arrangement to lower your monthly mortgage amount, due to your current or near future income level change of status. The Loan Modification is in hopes of preventing you to not default in your payments &/or have your home go into foreclosure. This is on your primary residences only.
Every homeowner's situation is different and are handled on a case-by-case basis. Your lender will want to know and see that you are able to make the new mortgage payment/arrangement amount.
Prior to calling your Lender, have the following information ready:
1. Most recent Mortgage Statement & Loan Number
2. Income information (household expenses: monthly cable bill amount, gas bill amount, food expense amount, etc.)
3. Income documention (last two years of your Tax Returns and most recent paycheck stubs)
4. Most recent Bank Statements (they may want to see your last four months of statements)
5. Financial Hardship Letter (why you can no longer make your current monthly payment and/or why you've been late and can no longer afford your current payment amount). This letter should be very detailed.
HAVE lots of patience and good follow-up! I can't stress that enough. You may have to call your lender a few times before you reach the correct department &/or assigned to a representative. Remember.......the lenders are being bumbarded by calls every day from many, many homeowners that are in need of help, too. There are also non-profit housing counselers and agencies to assist you (see below), free of charge.
BEWARE! So, you've been getting calls from telemarketer's and seeing the advertisements from companies that will offer to help you with a Loan Modification or other services to prevent you from foreclosing. UPDATE as of 09-29-09: currently, The State Bar of California is investigating attorney's for misconduct related to Loan Modifications, in a rare move, the State Bar has released 16 attorneys under investigation - for a list of these Attorneys names, go to www.calbar.ca.gov
Here's what you should know before accepting and/or paying for assistance's:
YOU can do this yourself. Here is a very helpful link for you: http://www.car.org/legal/mortgage-workout-programs/277068/ (Participants include: Fannie Mae, Freddie Mac, Federal Home Loan Banks, Hope Now participants, Department of the Treasury, Federal Housing Administration and the Federal Housing Finance Agency, and Wells Fargo.)
Effective October 11, 2009, ADVANCED FEES FOR LOAN MODIFICATIONS ARE NOW PROHIBITTED!!! On October 11, 2009, Governor Schwarzenegger signed Senate Bill 94 (Calderon), and the legislation took effect immediately upon his signature. Thus, California Law now prohibits any person, including Real Estate Licensees and Attorneys, from demanding or collecting an advance fee from a consumer for a loan modification or mortgage loan forbearance services affecting 1-4 unit residential dwellings. Agreements entered into and advance fees collected prior to October 11, 2009 are not affected. Advance fees inadvertently collected after October 11, 2009 must be fully refunded.
There are non-profit agencies that can assist you without charging you a fee. For information on non-profit housing counseling services, use the following links:
Federal Housing Administration
Hope Alliance Web site
http://www.lanhs.org/Center-for-Foreclosure-Solutions.html (Los Angeles County NeighborWorks® Center For Foreclosure Solutions)
If YOU or someone you know are in trouble with your mortgage payment, or believe you will be.........CONTACT YOUR LENDER and/or THE LINKS ABOVE NOW! DO NOT WAIT!
Please Feel free to email or call me with questions pertaining to this topic &/or any other Real Estate topics. I am here to provide you with all your Real Estate needs........now and in the future!
Dawn Gonzales
REALTOR®
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