Loan modifications are agreements between the borrower and the lender. The agreement terms vary widely. Some loan modifications can deal with past-due payments. Others can extend the time to pay the loan, lower the payment, lower the interest rate, or even forgive a portion of the balance.
Some lenders participate in loan modifications and some do not. There are certain laws and government programs that apply, but applying for a loan modification does not guarantee that you will be approved.
Those who have attempted on their own to get a loan modification know that this process can be a paperwork nightmare. It is quite common to hear stories of mortgage companies “losing” documents half a dozen times over several months only to send out a foreclosure notice. The best thing a borrower can do is keep a copy of everything that is submitted.
Fannie Mae and Freddie Mac
Roughly half of residential mortgages are backed by Fannie Mae and Freddie Mac. To qualify for a loan modification, a borrower must fit a certain criteria. For more information, contact your mortgage company. The Home Affordable Refinance Program (HARP) may also help some homeowners if they qualify for this program.
There are many lenders that participate in loan modifications, even if the mortgage is not backed by Fannie or Freddie. If a mortgage company does participate, you can contact their loss mitigation department for information.
Your Next Step to Debt Relief
If you are struggling with debt, consult with an attorney who can give you guidance on options available to you. Each case is different and consultation with an attorney knowledgeable about the law as it applies to your particular circumstances is an important first step in resolving debt.
Read More About Bankruptcy and Debt Relief
Chapter 7 – Usually the cheapest and fastest type of bankruptcy, Chapter 7 can wipe out credit cards, medical bills, and loans.
Chapter 13 – Does everything that Chapter 7 does, but with the added benefit of being able to help catch up on past due mortgages, car payments, and taxes.
Taxes – If you owe money to the IRS, there may be several different options for you, including some non-bankruptcy options.
Student Loans – There are many solutions to student loan issues, including getting a better payment plan, curing a default, and even loan forgiveness.
Debt Lawsuit Defense – When a creditor sues you over a debt, you can respond with a defense, which may allow you to win the lawsuit.
Loan Modifications – A special agreement between you and your mortgage lender might help you with a past due mortgage loan.
Debt Library – More in-depth articles on some of the more detailed areas of bankruptcy and debt relief.