by Upside Down Mortgage Loan Modification Expert - Dan North
How Does Mortgage Loan Modification Work? It is basically simple, but you need to understand what it is and what your options are in mortgage loan modification so you are in better control of the outcome. Do you know if your lender is pulling the wool over your eyes? Are you just going to take his word for it? Reading How Does Mortgage Loan Modification Work is the first step in your education to put you at cause over mortgage loan modification with your lender.
In answering the question - How does Mortgage Loan Modification Work - there are two main methods for modifying a loan.
A permanent loan restructure or a temporary Mortgage Forbearance (technically not a modification of a mortgage loan since it is temporary in nature but is the more common agreement).
OK - So How Does A Mortgage Loan Modification Work?
Your mortgage loan contract is a legal agreement with your lender that spells out your financial transaction and obligations that financed your home. This legal agreement states:
The terms of repaying your obligation to the lender
The interest rate
The amount of payment each month
The number of years of the loan
The grace period on payments (if any)
Late charges
Penalties or other additional charges
Additional interest charges on delinquent amounts
What constitutes a default and breach of contract
The lenders right to collect or foreclose
It is all in the contract you signed with the lender. The lender can choose to enforce that contract if you are in default and take the home from you to repay the loan. You agreed to that before receiving the money to buy your home.
Fine, But How Does A Mortgage Loan Modification Work?
If both parties agree in writing to amend or modify the mortgage loan this is a modification. Once all the legal formalities are completed this restructured loan contract is your new mortgage.
It is just an agreement made in a legally binding manner, a contract. Written agreements can be changed by new written agreements.
When Can You Renegotiate Your Mortgage?
At any time you can renegotiate your mortgage to any terms you both agree on. It does not matter why you both agree on new terms or what the new terms are, as long as agreement is reached between you and your lender.
Each time a change is agreed to is a mortgage modification. The loan has been modified.
What Can You Modify On Your Loan?
You can modify:
The terms of repaying your obligation to the lender
The interest rate
The amount of payment each month
The number of years to pay off the loan (such as extending the loan to lower the payments)
Late charges (such as have all past due late charges forgiven)
Penalties (such as have all past due penalties forgiven)
Additional interest charges on past due amounts (such as have all past due interest charges forgiven)
The amount owed on your mortgage (such as reduce your balance owed, a principal reduction)
Change your mortgage from delinquent to current (if not forgiven have the past due payments attached to the back end of your loan, so you are now current)
The advantage to you is obvious but there has to be advantage to your lender to get their agreement.
Why Would A Lender Do A Mortgage Loan Modification?
There is only one reason your lender gave you a loan. It was a financial transaction to make money. If the lender makes more money (or loses less money) by modifying your mortgage they will. You have to demonstrate and convince your lender that the mortgage modification you want will make them more money (or lose less money) than if the lender forecloses.
How Does Mortgage Loan Modification Work For The Lender?
The lender will look at the liquidation value of the property, legal costs of foreclosure, maintenance/repair costs for the property and the costs of selling the property to recover the loan balance.
If you have an upside down mortgage the lender will lose that amount plus the above costs when they foreclose and sell.
That Covers How Does Mortgage Loan Modification Work? Want To Know More?
Read Part 2 Now In How Does Mortgage Loan Modification Work? Part 2 we go into examples of loan restructuring. Covering what your lender looks at before modifying your mortgage loan and what your lender requires.
Apply for No-Upfront Fee Hardship Loan Modification Find out for yourself. Apply for no-upfront fee hardship loan modification even if you do not qualify for the Government Making Home Affordable Modification Program. You may qualify for a No-Upfront Fee Hardship Loan Modification. (Currently available in California, Oregon and Washington)
DIY Modification Kit Are you looking for a DIY Modification Kit that will walk you through the entire process of modifying you loan? Then read on.
Mortgage Loan Modification Myths Exposed There are many modification myths floating around. Get the facts. More homeowners qualify for a mortgage renegotiation than lenders are letting on. Are you one of them?
How Does Mortgage Loan Modification Work? Part 2 In Part 2 we go into the nuts and bolts of Mortgage Loan Modification. Covering what your lender looks at before modifying your mortgage loan and what your lender requires.
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 Loan Modification from a position of power. There is Hope for Homeowners. Something can be done about it!
Ask General Loan Modification Questions - Get Answers Get answers to your own Mortgage Loan Modification questions. See what other visitors have asked and their answers. What do you want to know or need help with? Got a situation you need help with? Just Ask.
Ask Wells Fargo Mortgage Loan Modification Questions Get answers to your own Wells Fargo Mortgage Loan Modification questions, tell us your Wells Fargo horror story or just see what other visitors have asked and their answers. What do you want to know or need help with? Got a situation you need help with? Just Ask.
Mortgage-Modification-Answers.com 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 mortgage modification? Can I save my home? How does mortgage loan modification work?
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