Mortgage Loan Modification - Questions Answered
By Christina Cleri

If you find that your mortgage payments become more and more difficult to make each month, you may want to consider loan modification. Loan modification allows borrowers to have a more manageable, lower monthly mortgage payment by receiving a lower interest rate and/or extended term. Mortgage modification can help relieve the stress and burden that many feel when trapped under an elevated mortgage payment.

How is Loan Modification Different than Mortgage Refinancing?
Both loan modification and refinancing work to make monthly mortgage payments less for borrowers, thereby helping homeowners avoid foreclosure and remain in their homes. With refinancing, though, borrowers receive a brand new loan. Through mortgage modification, lenders simply modify the homeowner's existing mortgage to make it temporarily more affordable.

Who Seeks Loan Modification?
If you are eligible for refinancing, many lenders would suggest that you go that route. Refinancing is a more permanent solution to attaining a lower monthly mortgage payment. Modification is usually a temporary solution; after five years, your lowered interest rate will slowly increase to a set maximum rate. Therefore, lenders recommend loan modification to homeowners who currently have financial strain and may have already missed one or two monthly mortgage payments.

What are the Eligibility Requirements?
Banks want to help homeowners avoid foreclosure whenever possible, because a loan in default and/or the foreclosure process cost banks a lot of money. It is in a bank's best interest to help a homeowner modify his or her loan if they conclude that financial assistance is necessary. Though mortgage modification eligibility requirements vary depending on the lender, they often include the following requirements:

the borrower has a documented change in finances (e.g. job loss) and/or proven financial difficulties;

the property in question is the borrower's primary residence;

the homeowner has not filed for bankruptcy;

the borrower has defaulted on mortgage payments and is ~90 days late.

Unfortunately, some homeowners take advantage of the mortgage modification system and apply for a modification when it's not a financial necessity. Therefore, most lenders require that you show documented proof of financial difficulty so they know you're not purposely defaulting on your mortgage in order to receive a modified rate or term.

Who Grants a Loan Modification?
The first step in getting a modification is to figure out who currently holds your mortgage. You can find this information on your mortgage statement. Simply look for the name and address to whom you send your monthly payment. This is the lender you will contact regarding your loan modification application.

What Documents Must I Show?
Most lenders require loan modification applicants to provide the following documentation:

income verification (they want to make sure you'll be able to make the modified monthly payment);

a letter explaining your current financial hardship;

a comprehensive monthly budget.

There are several modification programs available for homeowners, including programs from the US Treasury, the Federal Housing Finance Agency, and most major banks.

For more information on mortgage loan modification please contact http://www.obamamortgagemodification.com

Christina Cleri
Real Deal Technologies
50 Waterbury Road #320
Prospect, CT 06712
http://www.realdealtechnologies.com

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