What is Loan Modification?
Loan Modification- This term has been getting a lot of attention lately and rightfully so. With millions of homeowners stuck in toxic adjustable rate mortgages and no ways to refinance out of them, loan modifications may be the only way to assist struggling borrowers. This term is used when your lender modifies your current mortgage (same loan you have, only changes are made to the note) in order to work with you and make your mortgage more affordable. A modification to your rate, balance of loan, delinquent fees owed, term of loan etc. can be made by the Lender. In the past this was only used when a borrower was delinquent but now we will see it being used before someone is delinquent. This will be the hottest term and the best way to help people avoid foreclosure.

• A Loan Modification will change the existing mortgage note and give the client a fresh new start in managing their home. Accounts will be brought up to date immediately.
• With a loan "modification" you take the mortgage you now have and change the interest rate and payment requirements in order to achieve a fixed rate. A change in rates and payments does not result in the need for a new closing, legal fees, survey, appraisal, or taxes. In contrast, if you "refinance" a loan you'll be required to have a closing and forced to pay a variety of fees and taxes.
• Lenders are willing to negotiate when borrowers are facing financial difficulties and can't obtain other financing alternatives. Federal Loan Modification shows the lender why it would be in the lender's best interest to agree to a workout arrangement. In turn, the lender will reduce the loan interest rate, reduce monthly payment amounts or change other loan terms to allow for an affordable loan to allow the homeowners to avoid foreclosure.

Under Equity brings the two parties of problem loans together to mutually agree to a workout that creates new and better loan terms which are affordable and realistic. The hope is that the new loan will enable the borrower to meet their obligations. With Under Equity's detailed, personalized financial analysis, this hope becomes a reality. Our clients accept the loan that is affordable to them based upon their current financial situation without the worry of another foreclosure.

HOW DOES IT WORK?

Under Equity will review the alternatives available to allow you to keep your home. The key to avoiding foreclosure is you! Through open communication with our loss mitigation specialists, we can try to help you cure your mortgage default without foreclosure. 

In general there are four options available to a homeowner in distress:

1.       MODIFICATION: In certain circumstances, an investor may allow us to add the delinquent amount to your loan balance or temporarily reduce the interest rate as well as your principle amount to assist you in curing the default and restoring your credit status.

2.       FORBEARANCE: A forbearance Plan is a repayment agreement between you and your lender. We will review documentation supporting your monthly income and expenses. We will develop a plan and place a proposal in writing providing for payment of one full monthly payment and a portion of the delinquent amount due on your account. The objective of the plan is to allow you to cure your default over a period of time, reinstating your mortgage, while allowing you to maintain your normal monthly living expenses.

3.       PRE-FORECLOSURE SALE: Federal Loan Modification frequently works with homeowners who due to a change in employment or other life event(s), can no longer afford their home. The decision to sell your home under these circumstances is difficult; in addition, fluctuation in real estate markets may leave you in a situation where you have little or no equity. If this is the case we may be able to assist in the sale of your home.

4.        DEED IN LIEU OF FORECLOSURE: In the event you have decided you can no longer afford your home and you do not want to go through the Marketing efforts or foreclosure, you may voluntarily return the property to the investor.

How do I apply for assistance? 
 Contact Under Equity and consult with one of our home retention specialist about the best possible solution for your individual situation.

How do I qualify for a Short Sale? 
A borrower must prove that a hardship exists. The lender must be willing to accept the short sale proceeds as full settlement of the debt. 

Can any Real Estate Agent assist me in selling my home in a short sale situation? 
Possibly, but usually you have only one shot to succeed in a short sale transaction, it is therefore highly recommended that you work with a company experienced in short sale negotiations that can properly represent you and is specialized in this field. 

How do I find a proper broker/agent? 
Under Equity has a network of qualified Real Estate Agents nationwide that can be assigned to you for assistance. The agents work under our strict guidelines.

Does my mortgage company want to foreclose on my property and take my house?

Generally not. When a mortgage company forecloses on a property, they almost invariably lose money. They lose even more if they are forced to take ownership of the property. Because of the mortgage companies as well as the investor's likely losses on foreclosed properties, there are wonderful ways to either avoid going into foreclosure or to get out of it. This is the good news.

The bad news is that you are really nothing more than a loan number (usually one of millions) to your mortgage company. While not trying to insult your mortgage company, they don't need or want to specifically help you. They simply need to ensure that they meet their numbers. While it may be encouraging to know that their financial interests lie in keeping you out of foreclosure, you should also realize that mortgage companies are some of the largest owners of real estate in the world. This is directly attributable to the sheer number of properties they assume after the foreclosure sale.

Is it too late to save my home if I am currently in foreclosure?
Unless the bank has already taken the house back, it is not too late. We may still be able to help you keep your home.

Can I do this myself? Why should I pay someone else to do it for me?
Yes, you can negotiate with your mortgage company yourself. Just as some people act as their own accountants or lawyers.  Some people are knowledgeable enough about mortgage delinquency that they are comfortable negotiating with their mortgage company.

However, for others phrases like "partial claim", "loan modification" and "special forbearance" are intimidating and confusing terms.  Most people find dealing with their mortgage company to be a dehumanizing experience as they are shuffled along the assembly line-like process, never sure if the representative they are talking to is truly looking out for their best interests or merely trying to meet their quotas while attempting to keep the call short.

When you are on the phone with your mortgage company and they tell you there is nothing that can be done for you, how do you know if this is the truth or if it is simply what the representative chooses to tell you as a result of their inexperience or apathy? These representatives aren't sitting in an office of their own, thinking about what a great career they have. The mortgage company representatives you will deal with work in call centers- a low-paying, high-turnover field of employment. Our negotiators have more experience in mortgage retention than most any of these representatives, do you?

How many financial transactions are as important to the average person as their home? Much like in any important matter, having the proper guidance and representation can make all the difference in the world. It can save you time, trouble and money and ultimately, your home.