OPTION #1   “THE LOAN MODIFICATION”

WHAT IS A LOAN MODIFICATION?

The loan modification basically is modifying your loan.

Example:

                        $200,000       Value of the home

                        $185,000       What is owed

                        $    1,500        Monthly Payment

                        $         10        Payments behind

                        $  15,000       What is owed to bank in back payments

                        $    2,500       Attorney fees

So now to bring this loan current you can try a loan modification. You call the bank and tell them you have 6 or 7 payments and you want to do a loan modification.  This means the bank will put the other 3 or 4 payments on the end of the loan. 

Example: 

Let’s say the payments you owe are payments # 22, 23, 24, 25, 26, 27, 28, 29, 30, 31.  Remember, a 30 year loan has 360 payments.  Making 7 payments to the bank you would be paying payment # 22, 23, 24, 25, 26, 27, 28.  Payments 29, 30, 31 would go to end of the loan with payment 360 and become payment 361, 362, 363.

Doing a loan modification most of the time the bank will require 60%-70% of the back payments to be made plus, all attorney fees.

Example:           

10 payments behind at $1500 per payment. You pay 7 payments plus attorney fees.  Due to the bank is

                                   1500 x 7 = $10,500

                                   Attorney    $ 2,500  

    Total Due  $13,000

Note: if you have late payment fees, back real estate taxes, property inspection charge or forced insurance due the bank will make you pay this at this time too.  Sometimes they will waive the late fees only. 

You will end up paying $13,000 to get current and to get out of foreclosure instead of $17,500.

Remember this point

You can only do 1 loan modification per year or only 4 per the length of the loan however; no more than one per calendar year. If you refinance with another mortgage company then the loan modifications you did before don’t count, new mortgage company, clean slate.

The bank might ask for “Proof of Funds.” This means you have to prove you have the $13,000.  The bank may ask for a copy of your last 12 months of bank statements.

Once this is done you are one step closer to keeping your home. If you choose this option call me for some FREE advice so I can help you with this process.    Good Luck and God Bless!