The Most Common Loan Modifications
If you are considering applying for a loan modification, you will eventually find your self shopping for a lender that will meet your needs. This is one of the things that you must take your time and try to contact as many lenders as possible and not just settle for the first one just because you find it to be a time consuming process.
To help you with the process we have compiled a cooperation report list of the major lenders to better give you an idea on what to expect from some of these companies. This is a list obtained from a non for profit organization called HelpUmodify.org.
The list is broken down from the easiest to deal with, to the most difficult to deal with according to HelpUModify.org.
1.) CountryWide:———————Easy to work with , good results
2.) Chase:——————————-Easy to work with , good results
3.) EMC:———————————Easy to work with , good results
4.) AHMS:——————————-Easy to work with , good results
5.) Aurora Loan services———-Easy to work with , good results
6.) Wilshire Credit——————-Easy to work with , good results
7.) Wells Fargo————————Difficult to work with , expect delays
8.) GMAC——————————-Difficult to work with , expect delays
9.) Washington Mutual————Difficult to work with , expect delays
10.) Downey Savings-—————-Difficult to work with , expect delays
11.) World Savings/ Wachovia—-Difficult to work with , expect delays
12.) HSBC——————————–Difficult to work with , expect delays
13.) Fannie Mae/Freddie Mac—–90 days late to qualify
14.) Indie Mac/FDIC —————–60-90 days to qualify
loan modification program
Now one of the most common types of loan modifications is the Temporary Reduction this is a deal where the homeowner gets a a temporary reduction in interest rates from anywhere between a 1 to 5 year span in order to help them get back on their feet .
Another type of loan is known as a Forbearance Agreement. This is an agreement that rolls all of your past due payments, penalties and interest into your current loan agreement until all past due amounts are paid. However, this tends to result in increasing your monthly payments which is exactly what you don’t want. The main purpose of a loan modification is to help lower your monthly payments to avoid foreclosure, so this would obviously not be a good option.
Extension of loan terms: This is when a lender will extend the loan term, say from a 30 year, to a 45 year term for example. This will result in lower monthly payments since the principal and interest can now be spread over a longer period of time.
The most recent and probably the most effective refinancing or loan modification if you qualify, would be the new Making Home Affordable Plan in which if you have either a Fannie Mae, or Freddie Mac type of loan, you stand a very good chance at either being accepted for a mortgage refincance or loan modification.
If for whatever reasons your applications are denied, you still have some options. The first option is to continue as is, in hopes of more options later, or you can walk away from your home in which the foreclosure will hurt your credit, or you can get a ‘Deed in Lieu of Forecosure‘ which avoids the foreclosure process, but you are still giving up the home.
A foreclosure can be delayed for months or even years, however it is going to hurt your credit significantly, as they have changed the rules in when you can purchase a new home after foreclosure.
The last option would be the Short Sale. This is where you sell your home for less that what you owe on it. This will help preserve your credit, yet still requires negotiation with the lender to accept the offer of the short sale.
Obviously the last few options are less than favorable, as nobody wants to lose their homes. This is why it is extremely important that you move very quickly if you foresee any possible financial difficulties in the near future. Start to prepare your self now to prevent any unfortunate situations for the future.
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