The following is a simple explanation of what a modification is:
A loan modification is the process by which a lender agrees to modify the existing terms of a mortgage to more favorable terms, such as a loan term extension, a modification of the monthly payment amounts, or a revised interest rate. It is not a refinance, but rather, a modification of an existing loan. (Click here to see a detailed explanation of the President’s plan; http://www.makinghomeaffordable.gov/ )
The FBI is currently investigating roughly 2,100 mortgage fraud cases, up 400 percent from five years ago. In fact the statute of limitations has been increased from five years to ten years in order to better prepare a case against those who would commit fraud or take advantage of the public.
Here are a few main points you should know.
There are no loan modification guarantees.
Each borrower's financial situation is unique and each lender has its own loan modification criteria, making it impossible for any company to guarantee a loan modification. Successful loan modifications include knowing what paperwork to prepare and how to prepare it, understanding your credit and how to improve it, and presenting your case in terms that resonate with your lender. Even then, there is a chance - not a guarantee - that your loan will be modified.
Never pay a large amount of money up front.
Some loan modification companies ask anywhere from $2,000 to $5,000 in upfront fees - fees that may not obtain a successful loan modification. Remember, there are non-profits that will help you through this process and yes, there are quality, honest for profit companies as well. Just be sure and ask them questions based on what you have hopefully learned by visiting our site or live class.
Never sign over your title.
Legitimate loan advisors would never ask you to sign over the title to your home or ask you for power of attorney. Signing over your home deed or granting this type of decision making power to a third party is rarely a good idea. You could end up losing your home to a scam artist.
Do not put money in an escrow account.
Never put money into an escrow account on the advice of a third party, even if they tell you they'll make house payments on your behalf. If you have money for an escrow account, send it directly to your lender as a good faith payment. You'll be in better standing with your lender while avoiding the risk of fraud in the process.
Be sure and visit our HELP Blog and ask your specific question or attend one of our workshops in order to be better prepared to engage a professional.
