Home
Search This Site
Loan Mod Blog
Qualify For Loan Mod
Qualify For Gov Mod
Do It Yourself
Loan Mod Info
Ask Mod Questions
Foreclosure Questions
Loss Mitigation
Principal Reduction
Contact An Expert
Legal Notices
Site Map

[?] Subscribe To This Site

XML RSS
Add to Google
Add to My Yahoo!
Add to My MSN
Subscribe with Bloglines

Use this search feature to quickly find the information you're looking for.

How Does Mortgage Loan
Modification Work? Part 2


by Loan Modification Expert - Dan North

(In part 2 we go into the nuts and bolts of mortgage loan modification covering what your lender what your lender looks at before modifying your mortgage loan and what your lender requires. If you did not read Part 1 go to How Does Mortgage Loan Modification Work? Part 1)

When Will A Lender Agree To
Mortgage Loan Modification?

Lets say your are upside down on your mortgage by $100,000 and you are paying $2500 per month. If you pay $1000 less a month, how long would you have to pay $1000 less a month to equal $100,000? Right, 100 months or 8.5 years.

If your mortgage is upside down by $100,000 the lender will probably lose more, if he forecloses. The more expensive the home, the more the lender loses. They will likely end up discounting the market value by 15%, plus pay the Realtor commissions at 3% on the low side. Lets say the loan balance was $500k, the house was worth $400k and sold for a 15% discount at $340k ($160k loss) plus 3% commission of $10,200 ($170,200 loss) and lets say there was $5k for legal and other costs ($175,200 loss) now we are up to 14.5 years of paying $1000 less a month.


Now Combine
Mortgage Loan Modification
With Principal Forbearance

Now, to modify the monthly payment to $1500 a month, plus make it attractive to the lender. We use a principal forbearance, by dropping the principal down $100k, re-figure the monthly payments on $400k ($500k-$100k), plus drop the interest rate a few percent. The principal reduction will be due as a balloon payment when the house is sold, refinances or at the end of the loan, with an option to continue the same payments until principal forbearance amount is paid.


I Pay Mortgage Insurance
Can't They Do Something?

If you are in a situation where you are behind on mortgage payments and the lender is requiring repayment before they will begin mortgage renegotiation this is an excellent time to bring in your Mortgage Insurance Company.

You have been paying for all that insurance over the years now it is time to benefit from it. Usually you can arrange to have your mortgage insurance company give you a loan to cover the costs of the delinquent payments and often your lender will help to arrange it.

This solution is much cheaper for both the lender and the mortgage insurance company, especially if you have an upside down mortgage.

The insurance company will end up paying the difference between the discounted foreclosure sale price and the loan balance.

If you have an upside down mortgage this can be a very large amount of money for the insurance company. Loaning you the money for the missed payments is much cheaper than paying out $100k or more after a mortgage foreclosure sale.


What Else Should You Modify?

Remember you can restructure any loan term if the lender agrees. So do not forget all those late fees and penalties. Lets just cancel those 100%. That one is easy with the lender if they are convinced to do a loan modification.


So How Does
Mortgage Loan Modification
Work?

Any way you want, but there are some points that have to happen first.

  • You must have a valid financial hardship. If you do not, your lender will not agree to restructure you loan. They are not into losing money if they do not have to.

  • You must convince your lender, with evidence, how you will save them money by paying them less.

  • You must show your lender how you can afford the new modified payment you are asking for and prove it.


That Is How Mortgage Loan Modification Works!



Return to top of Part 2



Mortgage Modification Myths Exposed
There are many Modification myths floating around. Get the facts. More homeowners qualify than lenders are letting on. Are you one of them?

How Does Mortgage Loan Modification Work? Part 1
Mortgage Loan Modification is simple, but you need to understand what it is and how it works so you are in better control of the outcome. How do you know if your lender is pulling the wool over your eyes?

What Is Mortgage Modification?
Find out what Mortgage Modification is, what it can do, how it can benefit you, what happens when it does not and what to do, plus how to do Mortgage Modification from a position of power. There is Hope for Homeowners. Something can be done about it!

Get Pre-Qualified For A FasTrac Hardship Loan Modification
Pre-Qualify for hardship loan modification even if you do not qualify for the Government Making Home Affordable Modification Program. You may qualify for FasTrac Hardship Loan Modification.

Ask Your Loan Modification Questions - Get Answers
Get answers to your Mortgage Loan Modification questions. What do you want to know or need help with? Got a situation you need help with? Just Ask.

Find out if you qualify for HOPE For Homeowners, Government Mortgage Assistance or a loan modification from your lender
Find out if you qualify for the HOPE For Homeowners or Making Home Affordable Programs. Whether just curious if you are eligible for Government Mortgage Assistance or you need government help to stop foreclosure right now, complete the form to see what mortgage loan modification you qualify for.

What Is Loss Mitigation?
Get answers to Loss Mitigation questions - what is loss mitigation, what is the loan loss mitigation process and how you can benefit from the process.

HOPE For Homeowners H4H - Short Refinance
This Government help to stop foreclosure is a short refinance that includes principal reduction and a new option that makes a short refinance more attractive to lenders/investors

Mortgage Foreclosure Questions and Fighting Back Effectively
Help for the homeowner who is fighting to save their home from the mortgage foreclosure process. There is HOPE for homeowners. Something can be done about it!

Loan Modification Home
Get real answers to the real questions on mortgage loan modification, government mortgage assistance, government help to stop foreclosure and other loan modification and foreclosure questions. Do I qualify for a loan modification? Can I save my home?



Loan Modification Home | Mortgage Modifications | Loan Modification calculator
Ask Modification Questions | Loss Mitigation | Short Refinance
Mortgage Foreclosure Questions | Contact | Legal Notices | Site Map
The Home Mortgage Modification Blog | DIY Loan Modification Kit
Pre-Qualify for FasTrac Hardship Loan Modification

Home And Commercial Modification Help Nation Wide
Offices Locations: Missoula Montana - MT and Los Angeles California - LA CA


Didn't find what you were looking for? Use this search feature to find it.


footer for mortgage loan modification page