Loan Modification: What You Need to Know

If you are in danger of falling behind on your home loan payments, it may be time to consider a loan modification. A loan modification allows for the re-structuring of the terms of your loan, including interest rate and the length of the payment plan. In some cases, a modification can even result in forgiveness of some of the principal balance of your existing loan. Ideally, these changes will provide you with an opportunity to stay in your home while continuing to make affordable payments.

Not every Orange County homeowner automatically qualifies for a loan modification. You must be able to prove that you can consistently make the new payments. You must also show that you are not currently in a bankruptcy proceeding and that your home is your primary residence.

It is important for Orange County homeowners to understand that loan modifications can take time. You must consistently reach out to your mortgage lender to make it happen. Call your lender regularly and keep records of your calls including the name of the person you spoke to and the date and time of your call. Even if you are persistent, your loan modification may take several months to complete.

There are also a number issues that may arise during the process of applying for a modification. Please be aware that:

  • You should not stop making payments in order to qualify for a loan modification.
  • Your current mortgage lender may be only a servicer and not the actual holder of your loan. Make sure you know who actually owns your home.
  • You may have different mortgage lenders if you have multiple mortgages.
  • Do not pay upfront fees for a loan modification. That is a sign of predatory practices.
  • Your lender does not have to approve your request. You may have to fight for the right to change your loan.

After you have sent in the final paperwork for your loan modification, you will likely face a trial period. If you continue to make payments under the new terms, then, the loan modification will become permanent. If you want to sell your home, you must wait until after your loan modification becomes permanent.