Frequenlty Asked Questions
About Mortgage Modification
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The simple answer is YES. New holders of your mortgage are legally bound by the terms and conditions of a properly modified permanent modification.
Strategic default is a process whereby the borrower purposely misses payments in order to get the the bank’s or mortgage servicer’s attention. This is done in hopes that the lender will wake up and alter the terms of the mortgage, usually by lowering the interest rate and the corresponding monthly payment. Thousands of homes lost in America every week started with a so-called strategic default.
If there is nowhere else to cut in your budget and you’ll lose your home without a modification (1) get the advice of an experienced professional you can meet with face to face; (2) spend the time to fully analyze your budget today and in the future; (3) understand the exact change you need; and (4) save every missed payment. Read our Foreclosure Process article
President Obama’s loan modification plan (the Making Home Affordable Program) is intended to offer a second chance to homeowners facing unaffordable home loans. It is a standardized plan that seeks to offer a way out of foreclosure for qualified homeowners. Participating lenders are given monetary incentives to offer the plan to interested homeowners. The plan seeks to lower the borrower’s mortgage obligation to 31 percent or less of their gross monthly income. Read about other options for Foreclosure
Anyone at risk of default may be eligible for mortgage loan modification. While there are some guidelines for government programs and private loan modifications, anyone can attempt a loan modification. There is no requirement that your loan be in default. The real question is not qualification but success. There are many factors that go into a successful mortgage modification.
Success in mortgage modification requires a well-conceived financial plan, a well-documented hardship and the persistence to obtain a permanent mortgage modification. Read our Foreclosure Process article
Trial or temporary modification is the process by which a bank or lender grants an “interim” or temporary solution or forbearance, whereby they take lesser payments on a temporary basis. It is not a permanent solution.
Principal reduction is extremely rare, but is the process where the lender agrees to take less than the borrower’s full obligation on their mortgage.
Any type of financial problem that happens to anyone in a household can be considered a hardship. Financial hardship is a very important buzzword to know when dealing with the world of mortgage modification. Many people often face foreclosure for reasons beyond their control. Many are underemployed or have family members who are underemployed. Their challenges can make it difficult to make mortgage payments.