A loan modification is when a borrower and lender reach an agreement on a home mortgage which adjusts the terms of the mortgage allowing the borrower to stay in the home during a time of hardship. The most common modifications are lowering of the interest rate, ‘fixing’ adjustable rates, lengthening the term of the loan, reducing the principal balance, forgiveness of payment defaults & fees, or any combination of these. The goal of a loan modification is for the lender to keep the mortgage a performing asset by altering the terms to assist the borrower in meeting their financial needs during this time of hardship.
How a Loan Modification Can Help You?
Homeowners who have received a loan modification are, in most cases, able to avoid foreclosure and remain in their home. Additionally, with a more affordable mortgage, homeowners are able to stay on top of their payments in the future and begin to rebuild their financial situation. If you are suffering from a hardship and your ability to make your mortgage payment has decreased, a loan modification may provide you with relief and additional income per month to begin to rebuild your financial situation.
If you are a homeowner who has suffered from hardship and, as a result, are struggling to make your monthly mortgage payment you could be a potential candidate for a loan modification.
Some good examples of loan-specific hardships include:
Behind on payments
Negative amortization loans (the payment is lower than the interest rate, so the balance owed actually grows)
ARM loans that have adjusted or are about to adjust
Upside down on their loans (they owe more than the home is worth)
Additionally, personal financial hardships are taken into account. These can include:
Reduced income or hours
Divorce or separation
Excessive medical bills or back taxes
Failed businesses or loss of employment
If any of these or other hardships are making it difficult for you to pay your mortgage you may qualify for a loan modification.
Results typically vary from one homeowner to the next depending on the hardship and existing loan terms, but common results of a loan modification include one or multiple of the following:
Decrease your monthly mortgage payment
Lower your interest rate
Reduce the principal on your note
Extend your payment term
And there is no refinancing-
How to Build Your Letter of Hardship
The hardship letter is often the key component of the loan modification packet. Each homeowner will write a letter of hardship to the lender stating how their situation has changed and what they expect in the future. This letter is the borrower's opportunity to describe their situation in their own words. Often this letter can alter the terms of the modification, because of this we urge borrowers to understand the best formatting and methods to writing this letter.
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Home Loan Preservation (HLP) strives to preserve the American Dream; saving families and their homes in all 50 states one home at a time. HLP is dedicated to providing premium service and quality results.
In order to most effectively help your clients, we offer several services.
The terms of a home loan can be modified, creating a solution for both the owner and the lender. The loan is adjusted so that the homeowner is able to make their payments without any refinancing. Modifications may extend the payment term, reduce interest payments or reduce the principal on the note. This means that if your clients is behind on or struggling to make their mortgage payments the lender may modify the loan with the assistance of HLP and HLP's legal networks.
HLP Debt settlement is a form of debt reduction where the person in debt and the credit card company agree to reduce the overall debts in exchange for a promise from the debtor to make regular monthly payments.