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- What is Loan Modification?
It is a permanent change that is made to an existing loan agreement. The changes normally take place in one or more terms of the existing mortgage. The results are simple and the borrower can afford the payments and avoid foreclosure.
- Are there any changes by the lender to the Late Charges during the Loan Modification?
Yes, the Late Charges are usually waived off in case of a Loan Modification.
- Can the lender inspect the property before Loan Modification?
Yes, if the lender thinks that it is necessary to inspect the interiors of the property to verify whether the inner physical conditions of the property can affect the borrower’s ability to repay adversely, the lender can do that.
- Is there a new basis interest rate during the Loan Modification?
Yes. Usually lender starts with a new basis interest rate and adjusts it over the period of loan modification. Most of lenders usually reduce the original rate to a temporary discount rate for the first 3 to 5 years (initial period), and let it either float to the market interest rate or fix it with a predetermine rate when the initial period expires. The rate in the initial period can be fixed or stepped up every year depending on the borrower’s finance situation and lender’s repayment plan. Lender’s objective is to help borrower to maintain affordable payments during hardship but then try to get back to his obligation to pay later. The decision also depends on the original notes been served and new loan programs that investors can exercise with their risk tolerance.
Per NPV test of HAMP specification, lender or service provides can start with the discount rate may be as low as Freddie Mac’s Primary Mortgage Market Survey (PMMS) weekly rate for 30-year fixed-rate conforming loans, and as high as the PMMS weekly rate plus 250 basis points. (To find the current PMMS go to http://www.freddiemac.com/pmms.)
Can I not myself approach the lender for Loan Modification?
Yes, you can and that is why we are here to help you. We will help to pre-qualify your application and suggest you what to do to submit your application with lenders. The pre-qualification, consultation and assisting you to submit package to lenders are free at no charge You are responsible to mail package to lender and to update finance statements as well as to follow up with lender.
How do I know if I am qualified for Loan Modification?
That is what we do. We will qualify you using Obama’s HAMP guidelines and NPV (Net Present Value) model test. Click here for HAMP site: Home Affordable Modification Program for details of the guidelines. We have developed this tool using government and lender guidelines in order to analytically and effectively find out whether your current finance situation meets assistance from these programs. Please note that by knowing the variables and what the HAMP test is looking for to qualify a borrower it does not mean we will make you to fit into the plan. We are here to help you find out whether loan modification is for you and if so what you should do and if not, what other alternatives you might have.
What is HAMP Guidelines?
As a part of the Obama’s Making Home Affordable Program, government provides some guidance and a base net present value (NPV) model that any lender servicer who participates in the Home Affordable Modification Program (HAMP) can use or, if eligible, customize into a proprietary NPV model. By using this NPV model the servicer can determine whether to modify the loan by using such an interest rate that there is a greater chance that the borrower will eventually be able to repay the loan in full. If not, there is a higher likelihood that the loan will go to foreclosure, and the investor will absorb the associated losses. If the NPV test is “positive” there is likely a loan modification. If it is a “negative” test the servicer can deny loan modification.
- What is the NPV test?
The Treasury's base NPV model test assesses borrower and loan information to determine the NPV outcome (positive or negative, and the amount) for a given modification. The test evaluates the positive or negative result when comparing the suggested net present value of a given loan modification with a net present value of a hypothesis foreclosure if the loan servicer would like pursue. The targeting reduced rate of a given loan modification is based on the Standard Waterfall process.
The Net Present Value test is required for all loans being considered for a Home Affordable Modification; this applies whether it is a Fannie Mae or non-Fannie Mae mortgage. Servicers must use the Treasury's base NPV model, or the servicer's customized NPV model to perform the NPV test.
- What is the loan modification process? Can you guide me?
The most critical part of loan modification process is to gather finance documents required by lenders and next to find out if you are qualified for these programs. Our pre-qualification test and process does not replace lender’s qualification, verification and underwriting process, but rather it confirms you the eligibility and what a good possibility of success. If loan modification does not work for you we will recommend you what other alternatives you can do to avoid foreclosure.
We will help you not only to provide free prequalification and consultation but guide you and refer you to work directly with representative of loss mitigation departments of banks and lenders so you can get direct assistance without going through any other charging service agency. Again, all of these services are free to you.
- I don’t have time. Can you help me to package the application, present me and follow up with my lenders directly?
Yes, we can. In that case you have to sign an authorization form to allow us working directly with lenders in your behalf. We will charge you a very reasonable service fee and get paid when you get a loan modification plan, not when you get a trial plan. There is no up-front fee for this full service. There is a contract service agreement to sign before we start this full service. Since loan modification plan is not for everyone we reserve the right to not provide you full service if it fails our pre-qualification test.
- Do you charge me if you help me to process my loan mod with lenders?
Again, we charge you only when we represent you to work with lender for your loan modification, and this is only after loan modification successful. This is to comply to California law bill SB 94 for loan modifications applied after Oct 11, 2010. The service fee and responsibility of each party to perform are defined in the contract service agreement contract.
- What problems do I have to face when working directly with lenders for Loan Modification?
- Lenders normally do not have well trained loan officers and/or customer services and cannot efficiently negotiate and cannot properly set up a loan modification. Such a scenario causes gap of communication, adding to the stress of borrower.
- Lenders may have different representatives or departments to work on the borrower’s loan files due to lender’s organization and use of resources. Such setup may cause improper handling on borrower files and so possible gap of communication and delay of process.
- Most of the lenders are interested in recouping the potential loss rather than keeping a customer for long term via a renegotiated mortgage agreement. They work for their own benefit, so approaching them requires some precision, an approach which will show them the benefits of loan modification for both the parties.
If you want to be certain with success and to stop foreclosure on your home, our full service of loan modification is for you.
- Do I get charge for Loan Modification?
No. All loan modification service is free unless you want to use the full service.
Call us direct at 408-956-9230 or 1-888-397-6663 during business hours Monday -Friday. However, since we do not charge upfront fees, we must pre-qualify every client to make sure they are a good candidate for a mortgage loan modification. The best way to do get started is by filling out the pre-qualification form from this website.
- As there any similarities between Loan Modification and Debt Consolidation or refinance?
NO. Debt Consolidation does not apply to the mortgages. It applies to non-secured debts like credit cards. In case of refinance there is down payment and other associated fee to be given to the lender. Refinance may also not be the option if the equity is too low or the current loan is too high compared with the sinking market value of the property. Loan Modification is simple restructuring of the existing loan.
- What documentations are required for the process to start?
Documents related to your financial condition, tax returns, bank statements, hardship letter, mortgage details and income are required for us to pre-qualify you with our loan modification test and to submit to lenders if you want to pursue.
- How long does it take for loan modification to process and to be approved?
Loan modification can be a lengthy process and depending on lenders it might take a lot of times and effort to get approved. Since your hardship is at the mercy of lenders and their investors you should not be optimistic that your loan would be modified even you are eligible. There are many factors that you eligibility may not become qualification or approval. However if you are eligible and meet qualifications you should submit package to lender. Lender might take several months to verify borrower qualification and hardship, underwrite the file, determine ability of making payment vs. re-default risk based on borrower’s income and finance situation. If it passes the test they might give you a three-month or longer time trial plan. If borrower meets all conditions of the plan lender will give a final plan for loan modification.
The foreclosure proceeds or the sale of the home are halted by the lender in the mean time.
- What do you look for in clients?
We can help anyone in financial trouble, but certain conditions can make our job easier. Ideal eligible clients are those who meet HAMP’s guidelines:
- Have a financial hardship
- have an adjustable-rate mortgage that has already increased
- have negative amortization loans
- are experiencing financial hardship due to bad loans or predatory lending
- What are the hardships that one needs to go through for loan modification?
One must go through either of the following hardships in order to qualify for a loan modification:
- Adjustable Rate Mortgage Reset - Payment Shock Illness
- Loss of Job
- Reduced Income
- Death of family
- Failed Business
- Job Relocation
- Marital Separation
- Damage to property (Natural Disaster or Unnatural)
- Military Duty
- Medical Bills
- What is the guarantee that the home will not be taken away by the lender once the borrower goes for loan modification?
Under HAMP program, servicers may not refer or proceed homeowner to foreclosure until homeowner is determined ineligible for HAMP, or contact efforts failed. However, if not qualified for HAMP, while some lenders may offer their in-house loan modification program some may proceed immediately to foreclosure based on their investors’ request. Some lenders who do not join servicing HAMP program with government may not offer any loan modification program at all.
- What is the process of loan modification?
The loan modification process has the following five steps:
- Step 1: Consultation: It is the first stage where after you consult with us, we review the case to find if, the case is suitable for loan modification.
- Step 2: Collect paperwork: In this next step, we ask for certain documents like income proof, bank statements, loan agreement, hardship letter, and monthly expense sheet and then by using loan modification NPV test model defined by HAMP we determine whether you are qualified and the best approach that can be taken.
- Step 3: Packaging and summit to lender: we will guide you how to package the application and refer you to work directly to loss mitigation specialists from these lenders to help you from here.
- All services up to this step is provided free.
- If you want us to present for you to lenders from this point on it will be a service charge when loan modification completes.
- Step 4: Process: a number of months process to repeat of Follow up, Update package and Negotiation: Based on how lender reviews your application this process may take a long time with a lot of activities for update and negotiation.
- Step 5:
- Trial Plan Approval: Once we reach an agreement with the lender, you will receive a trial plan with lender. You have to meet all conditions of trial plan in order to receive lender’s final plan
- Final Approval: Lender will send the final approval package to you and to us. Terms and plan of the final plan may be different than the trial plan. We will review and advise you on what to do in order to accept or refuse the terms on the final package.
- How to Apply and Qualify For a Loan Modification?
To apply for loan modification you need to fill up the simple form on the right (see the “Get Started Today!” section). To qualify for loan modification, you need to do the following:
- Present your income versus expenses chart to lender’s financial forms and prove that you can easily afford the monthly loan payments if they are reduced.
- There are certain financial hardship rules set by the lender. You need to qualify for those.
- You need to write a letter to explain your hardship
- You need to prove to the lender that you have failed to repay because of the current financial hardship. This can be done by showing your previous payment history and your current income such as paystubs, salary wages, commission, tips, business profit and loss, etc…
- You need to provide the bank statements to show your good expenditure habits and also to show that you will have emergency funds in case you fail again.
- You need to show your financial responsibility with the help of your tax payment receipts.
- You need to sign tax return verification and release form 4506T to allow IRS releasing your tax returns to lenders.
- Based on your income documentation we will be able to determine pre-qualification based on the NPV model test. However for a certain margin your lender may decide to give you a forbearance plan or a trial plan to try you out before reaching to the final plan.
- Can you help unemployed homeowners?
Depend. You may be qualified for the Home Affordable Unemployment Plan (UP) if your lenders or service providers participate to this plan. In that case lenders may give you a forbearance period during which a borrower's monthly mortgage payment may be reduced or suspended prior to considering such borrowers for HAMP.
- Do you count the income of people who are living in the home but are not on the title?
Yes. We consider the total income of the household, not just the homeowner.
- Do you have any preferred lenders?
We work with all lenders. Most of lenders we have been successfully working with are Bank Of America, Wells Fargo Bank, Wachovia, Chase, PNC, National Mortgage. The results depend not just on your lender, but also the specifics of your case and financial situation
- Can you help me with properties that I'm not living in or currently renting out?
Yes. But be aware that HAMP is desgined to help homeowner occupied property. Lender might have their in-house program to help non-owner occupied property but it depends on each case.
- What disqualifies a client from your program?
We cannot help people who have no source of income or have no proof of hardship.
- Can you help clients who have received a Notice of Trustee sale?
Definitely. The Loan Modification can prevent foreclosure up to a few days before the actual transfer sale date. However, if you are thinking of getting help, please don't wait until you have received a notice of sale.
- What are the charges for loan modification?
There is no charge from us if you follow our guide to apply loan modification by yourself. If you want us to represent for you to apply and work with lenders for a complete process, we charge a low service fee when loan modification completes. This is specified in our service contract if you decide to choose the full service to start with. There is a lot of savings compared with the refinance cost if this could be done by lenders or mortgage brokers. Besides, nothing is worth more than saving your home.
- Do I need to pay for your services in advance?
No. All of our service is free unless you want to use the full loan modification service.
- Do you collect the advance fee to work on loan modification if I already received the Notice of Default?
No. There is no difference in receiving NOD or not. If we can help you to save home we will do.
- What other options do I have if my Loan Modification is denied?
If your Loan Modification is denied Lenders or Servicers will recommend you:
- Short Sale: Lender / Servicer allows homeowner to sell property for less than full amount due on mortgage. You might be qualified for government HAFA Short Sale program or Lender in-house Short Sale program. Under HAFA Short Sale program, it guarantees release homeowner from future liability for debt. For lender’s in-house short sale program it varies depending on state rule and the status of recourse or non-recourse of the forgiven loans that lenders may ask for some contribution. Most of times lenders approve short sale without borrower’s contribution.
- Deed-in-Lieu: Homeowner voluntarily transfers ownership of mortgaged property to servicer in full. Homeowner provides marketable title, free and clear of other mortgages, liens, and encumbrances.
Contact Us at 408-956-9230 if you have any question. We are here to help you!