Loan Modifications

Many do not understand that by making the partial payments on their new temporary loan modification can be reported as delinquent on their original loan payments. For borrowers who do end up getting short-term loan relief their credit will definitely take a huge hit. Which if this is the only way you can keep your home it may not make any difference, but if the unthinkable happens and you lose your home it will place the homeowner in a really, really bad situation.

If a homeowner fails the Loan Modification program they could be liable for any past due amount accumulated during their trial modification period. The lender could report to the credit agencies homeowners are only making partial payments on their mortgage. This will cause your credit card providers to increase your interest rates significantly.  You could be denied for permanent loan restructuring because of the partial payment and low credit scores. You maybe required to repay the amount of debt that has now become past due as a results of those so called partial payments, along with any interest and fees.

Unfortunately lenders can not offer you loan modification program unless your 60 days or more late on your current loan.

What is a consumer to do?

• Try to stay current on payments while requesting a trail modification. 
• Try to get a loan modification under the federal Home Affordable Modification Plan (HAMP) which might have the least amount of impact on your credit score.
• Request that your lender not report your loan payment as partial payment to the credit agencies.
• Check your credit score regularly.

What should a homeowner remember?

• It is a myth that short sales, deeds in lieu of foreclosures or loan modifications have a lesser impact on credit scores than do foreclosures.
• When you can’t pay your mortgage your FICO score is going to be effected regardless under what circumstances you failed to make your obligations.
• Lowering the monthly payments is great for the short term but unless the principle is reduced your only forestalling the eventually disaster.
• Refinancing a existing loan maybe a option if you can find a willing lender.
• No company or individual nor any other institution can stop a bank from the foreclosure process, only you can.
• Banks will not go to great lengths to help, you must be persistent. 

My Advice

Provide statements (appraisal, Brokers Price Point, property evaluation) showing the current value of the property to the bank. It is an advantageous for you to show the bank the property has declined in value significantly and that they (bank) are highly unlikely to receive any amount greater than what you’re reporting – ask them to restructure the loan to this amount as this is what they will received in a REO or short sale. Not easily accomplished but it can be done.

See you at the top because we will help get you there.