The primary qualification for a loan modification is the evidence of a financial hardship situation. This means that circumstances have caused your current mortgage payment to be unaffordable and you are at risk of losing your home of going into default. The Fannie Mae loan modification plan, sponsored by the Treasury Department and paid for with bailout money, requires that you complete a form called a Hardship Affidavit.
Financial institutions are overwhelmed with the number of loans in which payments are coming in late or have stopped altogether. General consensus is that it is an advantage for the bank to keep someone in a home making slightly smaller payments rather than foreclose. But if banks make it TOO easy to revise mortgage terms, then people who could have made their original payments will take advantage of the situation and ask for a modification they don't really need. The problem for the banks then, is trying to determine who is REALLY in trouble. A second problem is that some homeowners have had their mortgage modified and then fail to make the adjusted amount and so lose the home anyway. Banks have discovered that if a homeowner secures the assistance of an attorney to manage the modification process there is a better chance that a successful modification will be done. It is assumed that the attorney will have advised their client if a modification should even be attempted.
Additionally, there are things that participating lenders like Wachovia must do before they foreclose on your property. Even if you did not apply for a loan modification, before they foreclose, they must evaluate your eligibility. They are required to make a reasonable effort to contact you regarding this matter.
What we do at that point is obtain all the necessary documents and information. The situation is carefully reviewed to ensure that there is a good chance of meeting the bank's criteria (and hopefully the guidelines for the Making Home AffordableMaking Home Affordable Program). Sometimes a modification isn't a viable option, and that is good to know early so that other action can be taken. But once we have determined that we can in fact assist the client, we prepare the necessary documents to be submitted to the bank to assist in "modifying" the current loan obligations. We then contact the bank and inform them that we are representing the client and take over all the work needed to follow up with the bank, keep them moving forward with the process and ensuring that they follow the laws.
The bank may or may not offer a modification, and if they do their first offer may not be much better than the current situation. There again is a good reason to have someone representing you. Banks are often NOT advising people that they qualify for the Making Home Affordable program even when this would be a great savings for the homeowner. By the way, it is not uncommon for the financial institution's staff handling foreclosures and modifications to be misinformed about their own process and unaware of the requirements of the law, so we find we are often correcting the bank staff on their errors. Depending on each client situation, we have been extremely successful in reducing the amount in which clients pay (we have seen an average of $500 to $1000 in reduction of mortgage payments), and pretty decent negotiations for the 2nd Mortgage. Because the bank who is second in line wants to re-coupe something from the homeowner, they are willing to negotiate and more open to accepting a lump sum instead of nothing at all.
Financial institutions are overwhelmed with the number of loans in which payments are coming in late or have stopped altogether. General consensus is that it is an advantage for the bank to keep someone in a home making slightly smaller payments rather than foreclose. But if banks make it TOO easy to revise mortgage terms, then people who could have made their original payments will take advantage of the situation and ask for a modification they don't really need. The problem for the banks then, is trying to determine who is REALLY in trouble. A second problem is that some homeowners have had their mortgage modified and then fail to make the adjusted amount and so lose the home anyway. Banks have discovered that if a homeowner secures the assistance of an attorney to manage the modification process there is a better chance that a successful modification will be done. It is assumed that the attorney will have advised their client if a modification should even be attempted.
Additionally, there are things that participating lenders like Wachovia must do before they foreclose on your property. Even if you did not apply for a loan modification, before they foreclose, they must evaluate your eligibility. They are required to make a reasonable effort to contact you regarding this matter.
What we do at that point is obtain all the necessary documents and information. The situation is carefully reviewed to ensure that there is a good chance of meeting the bank's criteria (and hopefully the guidelines for the Making Home AffordableMaking Home Affordable Program). Sometimes a modification isn't a viable option, and that is good to know early so that other action can be taken. But once we have determined that we can in fact assist the client, we prepare the necessary documents to be submitted to the bank to assist in "modifying" the current loan obligations. We then contact the bank and inform them that we are representing the client and take over all the work needed to follow up with the bank, keep them moving forward with the process and ensuring that they follow the laws.
The bank may or may not offer a modification, and if they do their first offer may not be much better than the current situation. There again is a good reason to have someone representing you. Banks are often NOT advising people that they qualify for the Making Home Affordable program even when this would be a great savings for the homeowner. By the way, it is not uncommon for the financial institution's staff handling foreclosures and modifications to be misinformed about their own process and unaware of the requirements of the law, so we find we are often correcting the bank staff on their errors. Depending on each client situation, we have been extremely successful in reducing the amount in which clients pay (we have seen an average of $500 to $1000 in reduction of mortgage payments), and pretty decent negotiations for the 2nd Mortgage. Because the bank who is second in line wants to re-coupe something from the homeowner, they are willing to negotiate and more open to accepting a lump sum instead of nothing at all.
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