What is a Loan Modification?

A loan modification is the procedure whereby a loan's payment plan is changed, due to the hardship of the borrower. This may include changes to the rate, the term and the monthly payment amounts. In rare cases, the principal amount may be reduced.

This process is handled through the lender's Loss Mitigation Department.


Why Would a Lender Agree to Modify Someone's Loan?

It's simple.  Foreclosures are at an all time high. Banks cannot afford to own many foreclosed home assets. Banks are in the business of lending money, not owning property. When they own property, their money is locked up and they can't lend it out, so banks lose money on foreclosed homes in almost every case. With this in mind, now is a great time to request a loan modification for your clients, if they have a verifiable hardship that could otherwise lead them into a foreclosure situation, and if they wish to stay in the home. The loan modification option saves the homeowner's home from foreclosure, helping both the homeowner and the bank.


How Else Does the Homeowner Benefit?

For the homeowner who wishes to keep their home, the Loan Modification is the solution, regardless of their current equity or credit situation. Different than the short sale, the homeowner stays in the home. Ultimately, the result of a Loan Modification is that the borrower
can make easier  and more consistent mortgage payments. This allows them to stay in their home and preserve the American Dream for themselves and their families, avoiding what has been dubbed, ' the American Nightmare' of losing their home to foreclosure.

Futhermore, a Loan Modification will not contribute to the decline of the local housing market, takes less time and effort than a short sale and is better for the homeowner's credit. In many cases, a Loan Modification can close in less than 30 days, assuming the owner provides all neccessary documents needed for the Loan Modification.


Who is a good candidate for a Loan Modifcation?


* Any homeowner who is having difficulty with mortgage payments.

* Homeowners who have recently adjusted mortgages.

* Adjustable Rate Mortgages that will be reset in the next 75-90 days.

* Homeowners 30 plus days late or more on their mortgage.



ITEMS NEEDED/ SUPPORT DOCUMENTATION

1. Last 3 months bank statements for primary bank accounts all pages.

2. If you re self-employed, you'll need income and expense statements and last 3 years of tax returns. We will need the signed copies of the original forms filed for returns.

3. Last 2 pay check stubs for the borrower and co-borrower is any.

4. 2 years most recent tax returns, again, need originals

5. Most recent monthly billing statement from the lender.

6. Copies of listing agreement if it has been for sale in the past 12 months.

7. Copies of any legal notices received from the lender(s).

8. Verification of any other income, such as alimony, social security, rental income, settlement funds, insurance claim funds, etc.

9. 2 years of most recent W-2 forms forms for borrower and co-borrower.

10. Photo id to verify identity.

Please be advised that not all loan modifications are approved and each bank if different and may require more documentation than what is listed above. Due to the change in the banking industry and market value, banks are behind and are overloaded with requests for loan modifications. Please be advised this process is not an over night process and will require patience and follow up phone calls etc. with your lender to check for updates and any other information that the bank may need.


If you have more questions please email aliyah@staragenthomes.com