What is a loan modification?
A procedure whereby a loan payment plan is altered due to hardship of the borrower. This can include a reduction to the rate, principal balance, and adjustment of the term of the loan and monthly payment amounts. This is handled by the lender’s Loss Mitigation Department. In essence, it is a procedure whereby a borrower renegotiates the terms of his/her current loan with his/her lender. Contrary to belief, lenders do not want to foreclose on a house. With foreclosure at all-time high, lenders, more than ever, are willing to modify or renegotiate loans.
Who qualifies for a loan modification?
Anyone that is having trouble making his or her payments may qualify for a loan modification.
How much will it cost to perform a loan modification?
Unlike other modification companies, at PreFore we only charge our clients based on what we can save them (rather than a standard flat fee). There are absolutely no upfront fees, and if we can’t modify your loan, you won’t be charged a penny. If we successfully modify your loan, our fees are 3 times your monthly savings. For example, if we save you $300 a month off of your monthly payment, our total fees are $900. We have also set a cap for our clients, not charging anyone over $3,000. So if we were to save a homeowner $1,500 a month, instead of charging $4,500 (which would be 3 months savings), we charge our cap of $3,000.
What are some benefits of doing a loan modification?
A loan modification will lower your monthly payments to make them affordable, can lower your principal balance so you owe less than your home is worth, allow you and your family to keep your home, and avoid the costly and damaging effects of a foreclosure.
Does my lender require a complete loan modification packet?
Yes. Your lender needs your complete packet to be able to determine your eligibility for a loan modification. Don’t worry, PreFore will take care of everything and make sure that you have all the required documents before submitting them.
How long does it take to achieve a loan modification?
Our goal is to streamline the process, hoping it will take less than 30 days to get approved.
How does the Client Login Status work?
We will give you a tracking number so you can stay up to date with your modification status. We update the status of your loan modification once a week.
How can I send in my documents?
FAX: (888)997-7366. Email: firstname.lastname@example.org – or mail it in: 23942 Lyons Ave. Suite 215, Newhall, CA 91321.
What if I can’t provide all the information that you ask of me?
Your lender will not be able to modify your loan without all of the required documents. PreFore will assist you in obtaining all necessary documentation in order to modify your home.
How will I know if I got accepted for a loan modification?
Your bank will contact you and update you with the results.
Whom do I contact for further questions?
You can contact us at email@example.com or call us at (888)99-PreFore for further questions and comments, and one of our modification specialists will gladly answer your questions.
Do my monthly expenses need to be greater than my net monthly income?
Not necessarily. Most homeowners who are having financial difficulty and showing genuine hardship are in a “negative” monthly financial situation. Meaning, their total monthly expense is larger than their net (after tax) monthly income. However, you may still be eligible if you can show genuine hardship.
Will my credit score affect my loan modification?
A loan modification is not based on your credit; it is based on your financial hardship. Applying for a modification will not lower your credit score.
What if my income is too low?
There is no such thing as too low. You will need to show your lender that you will be able to afford the new modified payments.
What should I expect the terms to be on my new loan?
Terms can differ based on banks and scenarios. Some banks may lower your interest rate, reschedule payments, reduce your principal, increase your loan term, or any other type of modification that is needed.
I am in the process of foreclosure. Do I still have time to apply for a loan modification?
Yes, if you have not reached a foreclosure sale then you still have time.
Do I have to be late on my payments before I request a loan modification?
No. Although most lenders required borrowers to be in default when loan modifications first surfaced, they have since allowed borrowers to modify their loans even if they are not late as long as they can prove their current hardship.
I have a second mortgage on my house; does that qualify for loan modification?
Yes, you may also be able to modify your second mortgage.
If I own a duplex and reside in the building in another unit will I be eligible to apply for a loan modification?
Yes. If your duplex is your main residence then you can apply. However, investment properties, additional homes or vacation properties are excluded from being modified.
How much can I save by doing a loan modification?
You can save hundreds or even thousands of dollars a month, depending on your loan amount and rate.
Does it matter what state I currently reside in order to get a loan modification?
No. The loan modification process is the same for every state.
My personal and financial circumstances are unique and different than most other peoples, does that change the way I proceed with the loan modification process?
No matter what situation or scenario you are in, the loan modification process is always the same. Everyone has his or her own unique circumstance, which is what you are supposed to detail in your hardship letter.
What is a hardship letter, and what do I need to include in it?
A hardship letter is why you are in the situation you are in; the reasons for your hardship (loss of employment, divorce, medical, interest rate resetting, etc.). These are your personal reasons and there are no right or wrong answers. It should be about 1-2 pages in length and handwritten if possible.
What is a short sale?
A short sale is when you sell your home for less than the amount owed on your mortgage. The lender covers the difference between the two, fully satisfying your obligation.
How much will it cost to perform a short sale?
A short sale costs the borrower absolutely nothing to do. The lender covers all the costs, including but not limited to escrow, titles fees, commission, and repairs.
How much money in relocation assistance will I qualify for?
Every case is different. You may be able to qualify for up to $30,000. PreFore will work as hard as possible to get you as much help as possible. And what we get for you is all yours – no fees or commissions will be deducted.
What are the benefits of doing a short sale?
By doing a short sale, you can avoid going through the long and stressful foreclosure process. By allowing a foreclosure to occur, it not only hurts the overall home values and economy, but also negatively impacts your credit. When doing a short sale, your credit is not damaged as badly as it would going through foreclosure. You may also qualify for a new mortgage within 2-3 years, versus 5-7 by allowing you home to foreclose.
How do I know if I qualify for short sale?
Lenders are encouraging homeowners facing financial difficulty to complete a short sale on the property. If you are delinquent on your mortgage o are having a tough making payment, and are experiencing financial hardship, then you may qualify for a short sale.
What kind of hardships would I need to be facing in order to qualify for a short sale?
You financial hardships can vary from divorce, to loss of employment, cut in wages, illness, death in the family, etc. There is no right or wrong hardship, and everyone’s situation is different. It is important to be able clearly let your lender know what your hardship is.
How long does it take to do a short sale?
There are several stages to short sale process. Typically, a short sale can take anywhere from 3-6 months from start to finish.
If I am current on my mortgage, will I still qualify?
Yes, you may be eligible to do a short sale, even if you are current on your mortgage. A short sale specialist can determine your eligibility in working with your lender.
Why do lenders agree to do short sale?
Doing a short sale versus foreclosing on a property has a lot of benefits for a lender, the most important being that it costs them less. There are a lot of legal costs involved with foreclosing on a property, which your lender would rather not pay. Also, your lender is not in the property management business. They do not want to have to manage, maintain, and repair your property until they can sell it. It can often times be quite costly. By doing a short sale, they can write off the property on their books and save time and money.
When should I start the short sale process?
As soon as possible. Once you feel you cannot afford your monthly payments and no longer wish to keep your home you should consider short sale. The quicker you act, the better the odds for a successful short sale.
Am I allowed to stay in my house during the short sale process?
Yes, you may continue to live in your home while a buyer is being sought, giving you more time to prepare for your next steps.
Since the lender is getting less than what it was owed in the original mortgage, am I liable for paying that amount later?
No. By doing a short sale, your lender assumes liability in the contract, so you won’t be charged or billed for anything afterwards. A lender will do this to avoid paying more in costs through the foreclosure process.
Can I do my own short sale?
No. In many states, you need a licensed real estate agent to complete a short sale.
Can I perform a short sale on my rental property?
Yes. It is possible to short sale a rental property or non-owner occupied property.
Are there any tax consequences to doing a short sale?
In 2007, The Mortgage Forgiveness Debt Relief Act and Debt Cancellation legislation was passed, which allows homeowners to short sell their homes up to 2 million dollars with no tax consequences. All tax implications will be discussed with a short sale specialist based on your situation.
Do I get to review the offers made on the house?
All offers are submitted to the lender, as it is their decision to accept or decline an offer.
I have two loans on my property; will I still be able to do a short sale?
Yes. Both lenders will be contacted and informed that a short sale is being requested by the homeowner. A negotiation between the two lenders will take place to cover the difference between the principal balances and amount the property is sold for.
Does the condition of my house matter when doing a short sale?
No. Even if your home is not in good condition, a lender will prefer to do a short sale to avoid having to maintain and repair the property themselves. As we said, this can be quite costly and banks do not want to be in the property management business.
Can I do a short sale if I have filed for bankruptcy?
Yes. Consult with your bankruptcy attorney on selling your home during a bankruptcy.