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Home Loan Modification

  • Do I need a law firm for Home Loan Modification?
    • No, but it helps. Having bankruptcy attorneys available at no cost to the client can assist the loan modification personnel in negotiating a loan modification
  • Can a borrower obtain more than one loan modification?
    • Yes, however you cannot generally obtain more than one loan modification within a 24 month period
  • Is a Lender required by law to give a borrower a loan modification?
    • If you meet the criteria the answer is yes, however you may need legal help in enforcing the applicable standards or criteria. Associates of San Diego has the ability to bring disputes before the court if a lender is acting arbitrarily or unfairly in evaluating the legal criteria.
  • What exactly is the "Legal Criteria"
    • The household or mortgagor's has experienced a verifiable loss of income or increase in living expenses;
    • You must have the ability to pay the modified mortgage. You must receive “continuous income” in the form of employment income (e.g., wages, salary, or self-employment earnings), social security, disability, Veterans benefits, child support, survivor benefits, and/or pensions which are sufficient to pay the modified mortgage. Otherwise you must consider bankruptcy or short sale of your property.
    • The mortgagor’s surplus income is at least $300 and is at least 15 percent of his/her net monthly income;
    • 85 percent of the mortgagor’s surplus income is insufficient to cure arrearages within six months;
    • The mortgagor’s mortgage payment including escrow can be reduced by the greater of 10 percent of the original monthly mortgage payment amount and $100, using the Market Rate and amortizing the new loan over 30 years;
    • The mortgagor has successfully completed a 3-month Trial Payment Plan based on the reduced mortgage payment amount or a 4-month Trial Payment Plan in cases of imminent default
  • If I qualify for a loan modification is the Lender required to roll over legal fee's and costs?
    • Yes. Legal fees and related foreclosure costs for work actually completed for the current default episode may be capitalized into the modified principal balance
  • Can I reduce the principle owed on a first mortgage through a loan modification?
    • Yes. To help distressed homeowners lower their monthly mortgage payments, the U.S. Departments of the Treasury and of Housing and Urban Development established the Home Affordable Modification Program, for mortgage loans that are not owned or guaranteed by Fannie Mae or Freddie Mac. Under HAMP, a participating loan servicer must consider a sequence of modification steps for each eligible homeowner’s mortgage loan until the loan’s monthly payment is reduced to 31 percent of the homeowner’s verified monthly gross (pre-tax) income. Sometimes, a change in the mortgage loan’s interest rate is sufficient to reach the 31–percent target. Sometimes additional modification steps of term extension or forbearance are necessary as well.
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