If you're struggling to make your monthly mortgage payments or have fallen behind, you may be at risk of losing your home. But depending on the circumstances, you may be eligible for a loan modification, which can make it easier to stay on top of mortgage payments and avoid foreclosure.
What is a loan modification?
A loan modification is different from refinancing your mortgage. Refinancing entails replacing your loan with a new mortgage, whereas a loan modification changes the terms of your existing loan.
How does loan modification work?
Getting a mortgage loan modification could mean extending the length of your term, lowering your interest rate or changing from an adjustable-rate mortgage to a fixed-rate loan. Though the terms of your modification are up to the lender, the outcome is lower, more affordable monthly mortgage payments. Foreclosure is a costly process for lenders, so many are willing to consider loan modification as a way to avoid it. The application process can often be wrought with undue delays and improper denials. Mattei Law PLLC's tested streamlined process avoids these hazards and puts you in a better position to receive a loan modification that reduces your monthly payment and prevents a foreclosure auction and sale.
Who qualifies for a loan modification?
Not everyone struggling to make a mortgage payment can qualify for a loan modification. In general, homeowners must either be delinquent or facing imminent default, meaning they're not delinquent yet, but there's a high probability they will be.
If you miss a payment or fear that you might due to job loss, illness, increased expenses or other reasons, contact our office before the matter escalates into a foreclosure lawsuit. We may be able to negotiate a loan modification or other repayment plan before a foreclosure action is commenced against you.
Types of loan modification programs
Some lenders and servicers offer their own loan modification programs, and the changes they make to your terms may be either temporary or permanent.
If your lender or servicer doesn't have a program of its own, ask if you are eligible for any other assistance programs that can help you modify or even refinance your mortgage.
The federal government previously offered the Home Affordable Modification Program, but it expired at the end of 2016. Now, Fannie Mae and Freddie Mac have a foreclosure-prevention program, called the Flex Modification program, which went into effect Oct. 1, 2017. If your mortgage is owned or guaranteed by either Fannie or Freddie, you may be eligible for this program.
The federal Home Affordable Refinance Program, or HARP, helped underwater homeowners refinance into a more affordable mortgage. HARP has also expired. Fannie Mae's High Loan-to-Value Refinance Option and Freddie Mac's Enhanced Relief Refinance replaced HARP in 2019.