Foreclosure Help | Loan Modification

What is a Loan Modification?

Loan modification is a process to cut foreclosure loss to the lender and induce the borrower’s likelihood to perform under the new loan terms.

When should I apply for a Loan Modification?

When your answer to these questions in the affirmative, it’s time to apply to your lender for a loan modification.

If you are two months late in payments, and
If you have experienced hardship and cannot afford your loan or your loan modification anymore (meaning that your housing debt [first loan principal and interest, property taxes, insurance and HOA dues] is more than 31% of your gross income or adjusted gross income if self-employed) AND you can afford a new housing debt payment of 31% of income, or
If you loan or loan modification is within 90 days of adjusting up, has adjusted up or you loan is negatively amortizing and you cannot afford that payment (same test), or
If you were previously denied for a loan modification, you may now qualify because rules have changed.

What We Can Do for You

The Law Office of Marilyn Sullivan can no longer assist you with a loan modification due to certain laws that have been enacted to protect those experiencing hardship.

Marilyn says, 'It took me eight years of constant study to understand the loan modification process as only an attorney stuck in the downturn with a multitude of upside-down properties and with a client base suffering the same hardship, could do. Over those years I obtained successful modifications for myself and clients resulting in 2% interest rates, term extensions, and Millions of dollars of Principal Reductions [See Reviews]. Study of the constantly changing government programs is what it took to deliver the Loan Modification Library."

Athough I can no longer help you modify your loan, I offer you free-of-charge the Loan Modification Library which will guide you through the loan modification process. The documents reference HAMP, the government program which ended in 2016, but they most likely still apply since the lender standards for loan modification are likely the same as they were with the former government program.

Go to the Reviews page under Notable Loan Modification Results to see the results others have achieved with the Loan Modification product line. This is a former review on Google"

I've dealt with Marilyn on three large issues concerning mortgages over the past 6-7 years and she is the best in the business. All three situations ended up with successful terms that I can assure you would have been near impossible for me to complete on my own. Her communication is very solid (a rarity these days) and she's firmly in control of the direction of where to go no matter how complex the situation/problem may be. If you or anyone would like to contact me directly regarding my experience in engaging Marilyn's services - or if you're not sure whether to use her or not - please feel free as I was there before too! jeruel57 at gmail dot com. Thanks again Marilyn - especially on this latest go around.

Go to the Loan Workout Products Page for more information and to order the Loan Workout Product Line.

Loan Modification FAQs

What types of modifications are available?

This depends on a variety of factors including who your lender is, your current loan terms, whether your home is worth less than the loan, the nature of any financial hardship, your housing debt to income ratio, and how much you can afford. The possibilities include lowering your interest rate, re-amortizing your loan over 40 years, fixing your interest rate, forgiving principal, deferring back payments to the back side of the loan.

What if I am not experiencing a personal financial hardship? It’s really my loan and the value of my home that creates the hardship.

For some, their loans have adjusted up so rapidly that it doesn’t make sense to pay such high loan payments for a property that has declined so much in value. For some lenders, these factors alone spell sufficient hardship to qualify for a loan modification, especially if you are in default on your loan and if your debt to income ratio is 31% or above if the loan is your principal residence.

What if I have assets? Can I get a HAMP mod?

Most lenders do not consider your asset-based status. They generally just look at your debt to income ratio and your ability to pay a reduced payment.

Do I have to be in default on my loan?

Generally, you need to be at least two months behind on your loan payments. This lenders consider this the barometer that you really are experiencing hardship because this is when your credit sustains a significant reduction. They presume that this borrower is truly experiencing hardship instead of faking it.

What is the objective of a loan modification?

To modify the loan to make it a performing asset and thereby avoid foreclosure for the lender and the borrower. It is the only true win-win answer. But, you need to know how to fit your financial information into the lender's template. Let our Loan Workout Products guide you through this.

Can investment property loans be modified?

Most likely. The terms are not as good as for owner occupied loans, but may involve interest rate reduction and term extension.

What are the chances of getting my loan principal reduced?

Under the government program that expired in 2016 principal reductions were available since the lender was compensated by the government. This may no longer be the case, so principal reductions are difficult, but not impossible, to get since then. You will not be considered for a principal reduction unless the value of your property is significantly less than the loan amount, about 115% or above.

Can I get a loan modification if my credit is bad?

Loan modifications are not based on your credit like a typical refinance; actually the worse your credit is, the more likely you are to qualify for a loan modification. While you now have to meet stringent standards to obtain a new loan or refinance, loan modification standards are entirely different. The sole focus is ‘how can we modify this loan so this person can make loan payments, provide income to the bank and save the bank from losing money from foreclosure?” A bad credit score is actually a plus for loan modification.

Are lenders required to offer loan modification before commencing foreclosure?

As of 2008 in California under some circumstances and if the loan is secured by your principal residence, before your lender can record a Notice of Default, they must offer to modify the terms of your loan. This is an ideal opportunity to modify loan terms into a loan that works for you long term. I am unsure if this is the case now.

What is a Securitization review?

If you believe your loan is securitized into a RMBS (residential mortgage backed security) it may be beneficial to have securitization audit performed. There are settlements with the Attorneys Generals of many states that give consumer relief for securitization of their loans. For example, the 2013 RMBS Settlement with Chase regarding Chase, WAMU and Bear Sterns originated loans. However, most of these settlements also expired in 2016, so this avenue is not as advantageous as it was pre-2016.

When Should I begin the Loan Modification process?

When you understand the need to modify your loan and are two months late on payments.

How Long Does Loan Modification Generally Take?

Two to three months depending on your lender. The answer to speeding up the process is to check in with the lender at least weekly and make sure you clearly present your financials to fit into the lender's template. Use our Loan Workout Products to do this.

Can the process be expedited if I am facing foreclosure or an auction date has been set?

If you are imminently facing foreclosure or even if an auction date has already been set, the process can be expedited. But, why wait this long and the resulting stress. Be proactive. Don’t wait until the last minute. Your should at least apply when you receive the Notice of Default.

The above is for educational and information purposes and does not constitute legal or tax advice.