Frequently Asked Questions
What is Loan Modification?
Loan Modification-
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 Clients are facing financial difficulties and can't obtain other financing alternatives. E-Modifications, 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.
Can't I do this myself? Why should I pay someone else to do it for me?
Of course you can negotiate with your mortgage company yourself. Just as some people act as their own accountants or Legal Representation, 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. People in this category may 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 their talk time low.
E-Modifications, doesn't offer any service to you that you can not technically perform for yourself.
Does my mortgage company want to foreclose on my property and take my house?
Absolutely 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 company's 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.
What are "Hardships" and do I qualify?
Here is an example list of Hardships that lenders consider during the loan workout process:
Adjustable Rate Mortgage Reset- Payment Shock (uncommon, but we will see more lenders accept this in the future)
Illness
Loss of Job
Reduced Income
Failed Business
Job Relocation
Death of Spouse or Family Member
Death
Incarceration
Divorce
Marital Separation
Military Duty
Reduced Income
Medical Bills
Damage to Property (natural disaster or unnatural)
Can all loans be modified?
To modify a loan requires the agreement of both lender and Client. Since a loan modification request typically results in less interest, many lenders -- if not most at this point -- have little incentive to just say "yes." However, as the concept of loan modifying becomes more widespread, lenders can be expected to increasingly approve modification requests.
I borrowed $100,000 several years ago and would now like to increase the loan amount to $150,000. Can a loan modification work in this case?
NO. When a loan is recorded there's typically a tax based on the mortgage amount. Thus if a loan is modified and the Interest Rate, Monthly Principal, and Loan Length are changed, there is no event to tax. But if the mortgage amount increases above the original principal, then a State Government will likely see "new" financing and something to tax.
A second reason that loan amounts likely cannot be increased with a modification is this: Suppose a home has two loans, a first loan used to acquire the property and a second mortgage, perhaps a home equity loan. In this case, if the size of the first loan increases, the security of the second lender declines. We are not a Broker or a Lender, to increase your loan you would have to go through a financial company that will provide you with refinancing
I can refinance with No Closing Costs so why should I look for a loan modification instead?
First of all, our services are designed for those that can not refinance yet are in need to have their finances adjusted. There is a difference between "No Closing Costs" and "No Costs." In your situation, the lender is paying your closing expenses. The lender must get that money from somewhere, and that "somewhere" is your loan in the form of a somewhat higher rate than might otherwise be available, a larger loan amount, a prepayment penalty if you quickly refinance, and perhaps all three.
My lender will allow me to modify my loan, but only if I get a new appraisal. Why should I pay this cost?
Because it's not unreasonable, it's cheaper than refinancing, and it assures the lender that the property has sufficient value to justify continuing the loan.
If a Client can ask for less interest when rates go down, why can't lenders ask for more interest when rates go up?
They can -- and you can say "NO."
The goal of the lender is to make more loans and generate more income. The goal of the Client is to have less debt with less cost.
Clients have different motivations, and since a Fixed-Rate Loan Agreement is in place and favorable to them in a rising market, Consumers have no incentive to accept higher rates -- unless a lender would like to make some Concessions.
Other than money, why do lenders prefer "Refinancing" rather than a loan modification?
Replacing an existing loan with a new mortgage can substantially impact lender risk. For example, if you live in California and buy a home with a new loan, your financing is generally considered a "Purchase Money Mortgage." If you're foreclosed or go Bankrupt, the lender gets back the house but cannot sue you for any shortfall. However, if you "Refinance" you no longer have a Purchase Money Mortgage" and a lender can seek a deficiency judgment if you're foreclosed.
I have a lender who will agree to a Mortgage Modification. Do I just write them a letter to create the new terms?
You want your Mitigations Technician to review any proposed loan changes before signing anything.
Are loan modifications a new concept?
No, since the beginning of financing there have been lenders that taken the approach of community fortification instead of foreclosing on clients, as this is now televised and in the news it seams to be a new concept when in fact its not.
I am an assistant with a Real Estate Company but do not have a sales license yet. I sometimes recommend the company to buyers and sellers, but when the company assists them in buying or selling a home, I do not receive any extra compensation. This seems unfair. Should I not get a piece of the commission?
No.
The Broker cannot pay a commission because you do not have a Real Estate Sales License. This is not up to the Broker -- in many states, if not all, the payment of a commission to an unlicensed individual is generally prohibited.
What Should I do when I get behind on my Mortgage?
Don't ignore the phone calls and letters from your lender. This is the best way to wake up to a knock from the Local Law Enforcement telling you to vacate your home. Take this matter very seriously and work to resolve the problem as quickly as possible. Keep track of all correspondence you receive for later reference.
Stay in your home. You may not qualify for foreclosure help if the house is vacant. Your home, if proved vacant, can be seized. Stay in your home!
Contact E-MODIFICATIONS to discuss what the best foreclosure solutions are for you. We will negotiate on your behalf with the Mortgage Company to get your loan back in good standing. We understand the system, the foreclosure laws and the chain of events necessary to help you keep your home out of foreclosure.
Foreclosure Timeline – Once you become 90 days past due the Mortgage Company will typically issue a NOD (Notice of Default). After you receive this notice they will hire an Attorney and begin the Foreclosure with the Court system. The Foreclosure must follow a strict procedure laid out by your State laws. Eventually the house will be sold at auction if nothing is done to stop the Foreclosure. The Time line will show the time frames between the NOD and the actual sale date for the property. These time frames are typical and may vary depending on your actual situation.
What are my options?
Reinstatement - Pay the Mortgage Company all of the back payments to bring your mortgage current. This option is rarely attainable. The Mortgage Company will add late fees and Attorney fees on top of your back payments making this amount much more than people are able to come up with.
Workout - We can negotiate with your Mortgage Company to bring your loan back in good standing. There are many options available to us to get a work out approved. Some examples are as follows:
Forbearance - We will be able to arrange a payment plan based on your financial situation. This is mostly used in the instance of a tragedy or temporary loss of employment.
Loan Modification - We may be able to adjust the terms of the loan to meet your financial situation.
Partial Claim - You may qualify to have the repayment amount applied to the end of the current loan and resume normal payments.
Sell Your Home - You may simply sell your home before the Foreclosure Sale Date. Sometimes the Home Owner is unable to sell the home outright at the desired sale price and this is not an option. We may be able to negotiate a Short Sale on your behalf with your Mortgage Company. In this instance the Mortgage Company may take less than what you owe on the loan to avoid a lengthy and costly foreclosure process.
Deed-in-lieu of Foreclosure - We can arrange for you to simply give the home back to the Mortgage Company and walk away with a clean slate.
Bankruptcy - This is a last resort. This will only save your home temporarily. If you miss one payment during this process the lender will put you right back into foreclosure. This is like putting a band aid on a bullet wound... we will still need to come up with a permanent repayment solution to get your house payments back on track. We can put you in touch with an Attorney to file the necessary paperwork.
Foreclosure - You may elect to allow the home to be entered into Mortgage Foreclosure. This is the most damaging to you. The Mortgage Company will take your home and all of your equity. If there is no equity they may come after you to pay the shortage or “deficiency”. This is also the most damaging to your credit and your ability to acquire another home loan.
It is important to note that the Workout Options available to you may be limited dependent on the following factors:
1. The type of loan that you have
2. Which investor holds your note, and
3. Which Mortgage Insurance Company insures your loan (if you carry Mortgage Insurance on your loan)
Why use us?
Unlike other foreclosure solution companies, we are not trying to buy your home when you are vulnerable and in need of help. We will analyze your situation and offer proven modification help to save your home. We will negotiate with your Lending Company to stop foreclosure, save your home and resolve your case. We call ourselves “Specialists” because we SPECIALIZE in helping people get out of foreclosure. Our Name, E-Modifications, is the name that you can trust.
How do you get a Deed-in-Lieu of Foreclosure?
In Deed-in-Lieu of Foreclosure, we can negotiate with your lender to voluntarily give your property back to your Mortgage Company and your debt or deficiency is often forgiven. This won’t save your home, but it will help you with your chances of getting another mortgage loan in the future and it will help you avoid the lengthy legal process of foreclosure. Although it is a negative strike on your Credit Rating, it is less harmful than a Mortgage Foreclosure.
What does a Foreclosure Forbearance mean?
In Forbearance, we are allowed to delay or reduce payments for a short period, with the understanding that another option will be used at the close of that time to bring your account to a Current Status. Your lender, if in agreement, will then temporarily cease legal actions. Lenders may agree to combine your Forbearance with Reinstatement or a Repayment Plan if you know you can provide the needed funds to bring your account current by a specific date. This plan works for people who have just experienced a sudden living expense increase or income loss. We will negotiate with your lender to explain this hardship and hopefully get you the time you need to readjust your spending and recover financially.
Brief Overview of the Modification Process
A Modifications Specialist will contact you to get needed information and documentation.
We will ask you some very specific questions and for supporting documentation. You MUST be honest, but you want to be frank in your assessment of your financial situation. If you’re the eternal optimist now is not the time to be upbeat about your financial situation. Within the bounds of honesty you must show that you are in a bad financial place.
If we assess that you’re situation qualifies for a Loan Modification we will send you an Information Packet along with a worksheet to calculate your monthly expenses.
Modification Package Audit (checking for all documents)
We must show that you are financially incapable of making the increased mortgage payment. We also must show that a modification is going to improve your situation to a point where you will be in an acceptable situation for the bank..
Financial/Modification Review and Plan (what we can do for you)
After careful review we will determine if a Loan Modification is appropriate for you. If we or the Bank calculates that even after a Loan Modification you’re still too far behind to be helped they will deny you a chance at modifying your loan and other avenues will have to be explored.
Bank Contact and Review (what technicians do with the bank)
We don’t want to say for certain you’re headed to foreclosure because lenders don’t like wasting time one Modifications, when we need to exercise alternate avenues - there are enough people out there that have a slim chance of staving off total loss through a loan modification; but we will want to over-communicate to them that the problem is serious and needs immediate attention.
