A Loan Modification
A loan Modification: Explained….
Simply put a loan modification is a very permanent change in one or many of the terms of a borrowers mortgage. This allows the loan to be reinstated and results in a timely payment that the borrower can more readily and easily afford.
Some of the questions you may find yourself asking though even after having it explained quite simply are things like:
If utilizing a loan modification program option to make a note current can the lender include all fees and corporate advances? The answer is that legal fees and related foreclosure costs for work actually completed that are applicable to the current fiscal crisis may be recovered into the principal balance.
Can a lender perform an interior inspection of the said property if they may have a concern about its condition? Yes most definitely and absolutely they are putting the cash up and have every right to see basically what they are investing in.
Can a lender include any late charges in a loan modification? Any charges that are deemed late should be waived by the lender at the time of a loan modification.
When and if using a loan modification option can a lender expect to use an escrow advance for home owner associate fees? Lenders must also make sure to escrow funds for those items which if not paid would make liens on the property ahead of the FHA insured mortgage.
What is the new basis of interest rate which lenders may use when completing a loan modification? The new basis interest rate is 200 points above the monthly average yield on US Tresury securities adjusted to a constant maturity of 10 or so years.
Will HUD participate in a partial claim, should a lender default and qualify for a loan modification? Yes.
Are borrowers required to perform an escrow analysis when completing a loan modification? Yes.
These are the answers to the most commonly asked questions about a loan modification. With these answers you are now empowered to make a wise decision in regards to a loan modification. Knowledge is always power, the power to make wise choices and benefit from a loan modification which can help you get out of debt or catch up on back payments and ultimately keep you from losing your beloved home, health or employment. Use the knowledge above wisely when seeking a loan modification and you too can reap the rewards of fiscal wisdom.