What You Should Understand About Loan Modifications

Your home is your home, and — like most homeowners — you would probably do almost anything to keep it in your possession. Unfortunately, financial difficulties are hard to predict, and too many missed mortgage payments could land you in danger of foreclosure. When you have been diligent with your debts and a sudden or potential financial problem is fixing to derail your perfect record, you must consider applying for a loan modification with your loan owner. 

In the recent past, there were protections against foreclosure, including the Home Affordable Modification Program (HAMP) that recently expired and the Flex Modification program by Fannie Mae and Freddie Mac. As of this posting, there are limited protections available, and if your mortgage is not guaranteed or owned by Fannie Mae or Freddie Mac, you will not be eligible for their program, either. Luckily, most lenders offer loan modification programs designed to temporarily or permanently change up mortgage terms and requirements to stave off foreclosure. 

Although these programs exist, your lender might not be as generous or ethical as others. This problem can lead to issues with your loan mod application and terms, making it necessary for you to hire experienced loan modification lawyers in Philadelphia from Tadross Law to speak on your behalf.

Read on to learn more about loan mods, how to get them, and their benefits and effects. 

Reasons to Apply for a Loan Mod

The overarching goal of a loan modification is to make sure you can continue living in your home. But what do they actually do to help achieve that end? 

When lenders accept your application, they may agree to one or more of the following terms:

  • Cut interest rates
  • Change from a fixed interest rate to a variable interest rate (or vice versa)
  • Extend the loan term

The Good Usually Outweighs the Bad

While most homeowners are anxious to pay off their loans quickly and bristle at the prospect of lengthening their mortgages, in a loan mod, longer terms usually mean lower monthly payments. Additionally, loan modifications due to financial hardship could hurt your credit score — albeit less than a foreclosure. Some of these benefits and potential credit score consequences may not seem attractive for most borrowers at first, but these modifications could be invaluable assets in delaying or eliminating the threat of foreclosure! 

How to Secure a Loan Modification 

Since these modification programs are not on the federal level, the application process, benefits, and requirements can vary from lender to lender. However, there are some items you should collect before applying that could help you secure the mod:

If you need a loan modification, your lender will most likely require proof of hardship and relevant financial records, including bank statements and recent pay stubs. Without tangible evidence of hardship evidence, your lender may believe that you are an unreliable borrower and proceed with foreclosure. 

Also, if you have been dodging the phone when your lender calls, it could be more beneficial to answer a call as your lender may try to offer a modification program preemptively if you are showing symptoms of default. 

Call Us Today for Loan Modification Consultation

As we mentioned above, sometimes lenders can prevent you from securing a loan mod and go along with foreclosure proceedings. In these cases, it would be advantageous for you to consult with Tadross Law. Our loan modification and Philadelphia foreclosure lawyers can walk you through the application process, assist in compiling requirements, and be your intermediary for all negotiations and other communications. 

Call Tadross Law today to learn more about loan mods and what we can do for you!

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