How to Get a Loan alteration Made Easy

How to Get a Loan alteration Made Easy




A loan alteration is an alteration of the original mortgage agreement between a lender and a homeowner.  A lender will consider modifying a loan if the homeowner can prove that their current financial situation has made it difficult or impossible for them to make their mortgage payments.  This change may require the lowering or fixing of an adjustable interest rate, a reduction in mortgage payments, an extension of a loan term or a reduction in a principal loan balance.  A homeowner can negotiate their own loan alteration by contacting their bank directly or can hire a loan alteration company to negotiate for them. 

Financial Hardship

In order to be considered for a alteration, a borrower must prove that they have a financial hardship.  The following is a list of some of the hardships that may be considered by lenders:

  • An adjustable rate mortgage (ARM) has or will reset causing higher mortgage payments. 
  • A negative amortization loan has or will reset causing higher mortgage payments. 
  • A home is valued at less than what is owed to a bank. 
  • Divorce or marital separation. 
  • Predatory lending. 
  • Curtailment of income. 
  • Job relocation. 
  • Military duty.

Lenders are doubtful to consider hardship statements like “my Realtor, loan officer or loan broker lied to me” because they are difficult or impossible to prove.  Any other stated hardships will not be considered unless they are authentic and verifiable. 

The Loan alteration Company

Once an permissible hardship has been identified, a alteration company can offer three things.  First, an analyst can provide a forensic loan audit to estimate a homeowner’s closing loan documents and determine whether or not a lender broke any laws in the origination course of action.  Second, an attorney can analyze a homeowner’s financial picture during a preliminary approval course of action to determine the homeowner’s probability of getting a alteration from their bank.  Third, an attorney can negotiate with a bank to get a loan alteration on behalf of a homeowner for a fee.  Although there is no guarantee of success, the results of the preliminary approval course of action should give the attorney a good idea of whether or not they will succeed. 

Forensic Loan Audit

If a alteration company learns that a lender has committed state or federal violations while originating or servicing a loan, these violations can be used by the company as a negotiation tool against the bank.  In order to determine whether or not any laws have been broken, the homeowner needs to provide documentation from their closing loan package.  Some of that documentation may include the following:

  • 1003 residential loan application
  • TILA truth in lending act disclosure
  • Final settlement statement
  • observe
  • Good faith calculate
  • Notice of right to cancel if applicable
  • Riders

The discovery of lender violations does not average a homeowner will be preliminarily approved for a alteration because they nevertheless have to qualify for alternation payments.  

Preliminary Approval

When a lender decides whether or not to grant a loan alteration, its decision is based on whether or not the homeowner can provide the new payments.  In order to determine affordability, the homeowner needs to provide their financial information to the alteration company for examination.  Some of that information may include the following:

  • Pay stubs
  • 1099s
  • Profit and loss statement for self-employed borrowers
  • Bank statements
  • Proof of assets
  • Tax returns

The analysts and attorneys will also need information on a homeowner’s current mortgage payments, character taxes and homeowner’s insurance in addition as all other monthly living expenses in order to calculate the homeowner’s debt-to-income ratio. 

Cost of a Loan alteration

If a homeowner negotiates with their bank themselves, their lender may not charge them an up-front alteration fee but may require a payment amounting to a associate of missed payments.  For homeowners interested in negotiating their own alteration, a good place to start is by visiting the MakingHomeAffordable.gov website to speak to a free United States Department of Housing and Urban Development (HUD)-approved housing counselor.  A counselor can help a homeowner determine their eligibility for a loan alteration, assist them in the preparation of documentation for their lender, and guide them in their communications with their lender. 

A loan alteration company, however, charges a fee to negotiate for a homeowner but its attorneys may be able to freeze a foreclosure and relieve the homeowner from making a few payments to their bank.  A typical fee for a company to negotiate with a bank on behalf of a homeowner is $3,500.  If a company offers a forensic loan audit and preliminary approval for free, the homeowner has nothing to lose by getting them. However, if the homeowner wants an attorney to negotiate a alteration with their bank, that is where the charge comes in.  in spite of of the results of the preliminary examination, there is no guarantee of success. 

Loan alteration Fraud

There is fraud that has been committed in this business and will continue to be committed by individuals and companies that make false promises to homeowners in order to defraud them of their money.  Before proceeding with any loan alteration company, a homeowner should do their research on that company by their own personal and business networks, the Internet, the Better Business Bureau, government websites, references and any other helpful resources.  A homeowner should also ask questions about the sets the company offers and at what prices because not all alteration companies function the same way.  

Alternatives to Loan Modifications

If a homeowner is not able to get their loan alternation by their own efforts or with the help of a alteration company, they have the option to try to short sale their character or provide their lender a deed in lieu of foreclosure.  When a homeowner short sales their character, they sell it for less than what they owe their lender, and when they give a lender a deed in lieu of foreclosure, they convey their interest in their character to the lender as an different to foreclosure. 

Conclusion

It is more expensive for a lender to foreclose on a character than it is to keep a borrower in their home, as long as the homeowner can provide alternation payments.  It is a misconception that lenders will only review a loan that is in default especially if there are violations discovered in the forensic loan audit.  A loan alteration differs from a refinance in that it can take ninety days or more to accomplish, while a refinance typically takes thirty days.   

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