There are many scam artists who can further complicate your financial problems by taking your money and not delivering what was promised. Be exceedingly cautious as you seek financial assistance. If someone asks for payment or money upfront, BEWARE! This is often a glaring sign that they may be trying to scam you out of your hard earned dollars.
If you are a home owner in the New York City Area, Westchester, Rockland, Nassau, Suffolk Counties, or the surrounding area, and are having a problem meeting your monthly financial obligations, a New York Loan Modification could be your answer. Simply put, a Loan Modification is merely a restructuring of your home mortgage. Changes to your loan could include an interest rate reduction, an increase in the length of your payback period, or even a possible reduction of the loan amount. Any one of these changes or even a combination of more than one can help bring your monthly payments down to a more workable amount.
In the past, sometimes loan modifications were totally inadequate. They only provided a temporary reprieve. Home owners, sometimes only months later, discovered that they were still unable to meet their financial commitments. This is the prime reason that the federal government created the Making Home Affordable Program. If you need a Loan Modification there are two very basic questions that you should ask yourself before doing anything: Should I try to do this myself or should I obtain professional help?
Listed below are a few important facts of which you should be aware. This information will provide you with valuable insight as you try to alter your financial situation. The following Top 10 Mortgage Modification Tips will help you understand the steps needed to keep your home from being foreclosed.
ACT NOW - THE SOONER THE BETTER – Initially, Loan Modifications were given only to home owners who were already in the foreclosure process. This no longer is true. The earlier you start the process the better your chances are to avoid foreclosure. The Making Home Affordable Program (MHAP) does not mandate that you be in default to make application. If you go directly to your mortgage company your chances can be uncertain. There are several elements that could affect your chance of being successful. Who the lender is and the individual they assign as your negotiator are two such factors.
While you won't get a definite yes or no, the Federal Government's web site: Making Home Affordable Program, has a Payment Reduction Estimator that will help you determine what your current mortgage debt-to-income is and how much your monthly payment could be reduced if you qualify under the program.
DETERMINE IF YOU NEED PROFESSIONAL HELP – Can you do it yourself? Should you obtain the services of an Attorney? Find a qualified Loan Modification firm or perhaps a nonprofit housing group?
Doing it by yourself requires that you have the required time, necessary skills and experience necessary to negotiate with your lender. There are very few private citizens who have had any previous experience with renegotiating loans.
There are HUD approved counseling agencies that have plenty of experience with loan modifications who do not charge for their services. Make sure you don't pay any up-front fees or give confidential information to any company that is not a law firm. These are clear warning signs that you may be scammed by a so called loan modification company.
Hiring an Attorney, well versed in the many issues of loan modifications who can obtain the best possible terms for you, is money well invested. Nominal Attorney fees spent during the negotiations can pay dividends many times over during the lifetime of your mortgage.
DETERMINE WHO YOUR ACTUAL LENDER IS – Your loan may be held by a single bank or lending institution or may have been cut into many portions and held by a mortgage back security, which means it is held by many individuals. You can't establish if you qualify for a modification unless you know who holds your mortgage. There are several ways to find out. Start by going straight to your mortgage servicer (where you send the monthly check) and ask who owns your loan. Phone numbers can be found on your mortgage statement or on your payment coupons. There also are the web sites for both Fannie Mae and Freddie Mac where by typing in your home address you can determine if it's held by either one of these two groups.
While participation by lenders in the MHAP voluntary, the Federal Government is providing financial incentives to those who participate. Partly because of these government incentives, many of the major lenders are actively participating in the program.
BE COMPLETELY HONEST – The Loan Modification application will require that you submit significant amounts of financial data. If you supply exactly what the lender requires, the process will go smoothly and quickly. Ensure that all of the provided information is both accurate and truthful. Do not be tempted to "fudge" or alter the numbers in any way, as such inaccuracies and inconsistences can harm your chances of success.
Before contacting your servicer you should gather the following information:
- Monthly Mortgage statement
- Information about any other mortgages on your home, if applicable
- The two most recent pay stubs for all household members who contribute to the mortgage payment(s)
- The last two years of tax returns
- If self-employed, the most recent quarterly or year-to-date profit and loss statement
- Documentation of other income you may receive such as alimony, child support, social security etc.)
- The two most recent bank statements (savings, checking etc.)
- A utility bill showing homeowner name and property address
- Unemployment insurance letter, if applicable
- Account balances and minimum payments due on all of your credit cards
- Information on all your other assets
- It could be very helpful to prepare a letter describing any circumstances that caused your income to be reduced or expenses to increase (job loss, reduction in hours or rate of pay, divorce, illness, etc.)
AN EXCELLENT HARDSHIP LETTER IS VERY IMPORTANT – As mention in bottom of Tip No. 4, a letter which explains how you got into this financial situation will be extremely useful. It's very important that it be well written as well as be factual. Your lender must clearly understand exactly why you are in this situation. Your letter should also be chronologically correct so that the chain of events which affected your inability to continue to make your payments can be easily be followed by the reader. And lastly, try to keep your letter to the point. In other words make it easy to read and follow by your lender.
TALK TO THE APPROPRIATE PERSONNEL – Individuals who have attempted a loan modification on their own, often have reported that the most exasperating portion of the process was trying to find the right person to talk to. First you have to find the correct department within that organization. Once this is finally done you then have to find the person to talk to who has the proper authority to act in behalf of the lender. This can all be very frustrating. Be cool! Don't blow your top! Getting upset and venting your frustration over the phone will not get you any closer to the person you must talk to.
MAKE SURE YOUR GETTING THE BEST DEAL, AND THAT YOUR NEW TERMS ARE AFFORDABLE – After you present your case, you will have very little influence over the terms of your modification. The lender's negotiator's job is to get the most money possible while still retaining you as a customer. If you are offered a deal that you still cannot afford, don't accept it out of pure desperation. You could find yourself back in the same untenable situation in just a few months. The representative usually has a bit of leeway, so you must be able to convince him/her that the stipulations are still too expensive for you to afford. You must impress upon them that your detailed budget proves that you can't reasonably make the payments.
Foreclosure is extremely expensive for lenders, which gives you some advantage when negotiating a loan modification. Just make sure you or your attorney provides justifiable data on why their suggested deal won't work. This will very beneficial in helping you get the best possible terms.
BE CALM THROUGHOUT THE PROCESS – This can be a frustrating ordeal and it's easy to become angry. Don't succumb to this temptation. Poor conduct by you can lead to further frustrations. Bad behavior on your part can lead to a variety of negative actions by others. If you treat them nicely they will be more inclined to help you. Remember the old adage, "You can attract more flies with sugar than you can with salt". Reread Tip Number 6.
DOCUMENT, DOCUMENT, DOCUMENT! – Leaving a detailed paper trail of all your actions is critical. Documentation even includes telephone conversations. Include names, titles, phone numbers, dates and the basic essence of conversations. It's best to put such documentation in some sort of notebook so that crucial documentation is not lost or forgotten. When sending documents to others, either use certified mail or deliver servicers like Fed Ex to make sure your documents arrive and you have a record that they were actually received. Keeping copies of everything you transmit is also critical. Lastly, keep everything well organized.
HAVE PATIENCE – You have to be patient and proactive at the same time. Normal loan modifications can take from six to nine months. Obtain a proposed time line from your lender at the beginning of the process. Monitor the schedule of key events and follow up, in a professional manner, if key events approach and you have yet heard anything, a friendly and courteous reminder telephone call is in order.
AND REMEMBER – If you feel that you're getting the runaround, don't hesitate to "CC" your senator or congressman on your correspondence. Your representatives will probably not intervene for you, but it still could affect how your lender deals with you in the future. This should not be considered as an initial procedure but as a tactic that you can use if you are getting resistance from your lender.
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