Loan Modification. Is it something for you to consider?
I get asked about Loan Modification all the time. You should get advice from someone other than your lender if you are going to attempt a loan mod. It’s fine to listen to what they have to say, but they are not necessarily going to tell you everything you need to know. You’ll want to know that if you jump through all of those hoops how likely you are to get your modification approved, and you are unlikely to get a definitive answer from your lender.
First a word about who loan modifications are NOT for. They are not for people who are able to refinance. If you qualify to refinance your mortgage chances are really good that you will not qualify for a loan modification. You make too much money. Yes, even if you are upside down in your home. The people who will qualify for a loan modification are those who will likely lose their home if they do not get one. You will not be seriously considered until you go delinquent on your house payment. Before you do that you should research your options, including the possibility of actually getting approved for a modification. Of course, if you have no way of making the payment that decision may not be a voluntary one, and is perhaps an indicator that a modification should be attempted. Not all loans are able to be modified, and the lenders generally do not want to modify your loan because the other alternatives they have may make more economic sense for them. They are in business to make money, and loan modification generally reduce their income. Some lenders also have made sweet deal when purchasing the assets of a now defunct bank (see Indymac Bank, OneWest Bank) that make it even less profitable for them since the losses may be essentially insured with your tax dollars.
They will generally take a look at you if you are 30 days behind, but in some cases simply being close to that will suffice. I do suggest that you do your best to preserve what you can of your credit rating, as your credit score will affect many areas of your life. 29 days late does not significantly harm your credit rating. A “rolling 30 day late” will qualify for you consideration in many cases, and will do considerably less damage to your credit than 60 or 90 days late. Late payments are like earthquakes on the Richter scale. A 60 day late isn’t twice as bad as a 30 day, it’s more like ten times. A 90 day late is, well you get the picture. It may take one year to get over a 30 day, two years for a 60 day, and four years for a 90 day, depending on what the rest of your credit profile looks like. I’ll cover more about the process in my next post. 800-200-9329
I welcome your calls, comments and questions!
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