Often times, homeowners ask me œWhat exactly is a loan modification? The simplest answer is this -- a modification will adjust the initial terms of your loan that you agreed upon with your lender. There are three areas in which your loan can be modified: interest rate, principal amount owed or the length of the loan. Eighty percent of the modifications that are approved qualify for a reduced interest rate. The loan modification process can often times be tumultuous at best. Homeowners should be prepared to provide their lender with a large amount of documentation, often times repeatedly sending the same documents multiple times. Once all of the documentation has been sent in, and the modification has been submitted to underwriting, the œwaiting game begins. This is when I often recite the old adage œPatience is a virtue. Underwriting can take anywhere from 45-90 days to make a decision on a mortgagee's modification.
Although there is some hope for struggling homeowners, the statistics that are available are gloomy, to say the least. There have been 1.5 million HAMP trial modifications that have been initiated since the program's inception in March of 2009. Of those 1.5 million, only 153,000 have been converted into a permanent modification.
Is it worth all of the headaches? In all reality, the loan modification process is not guaranteed, but if you have patience and are persistent, it is definitely worth the attempt.
Thanks to Julie Maeda for writing this article. Julie spearheads The Haven Group, a company that helps homeowners with free loan modifications and provides options to struggling homeowners. For more information about the Haven Group visit thehaventeam.com or call 720-295-HOPE(4673).
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