Nationwide Mortgage Processing is now offering their service directly to homeowners like you. As a homeowner, you may of noticed a “Processing Fee” on your loan documents when you did a purchase or refinance. Many Brokers and Bankers outsourced their processing to companies like ours because of our experience. We now offer our service directly to homeowners who want professional help for the underwriting of their loan modification. Your paper work represents you to your lender, and in our opinion, having it done professionally by underwriters with 15 years of experience is very important if you want a successful modification.
Do not lose your home because you cannot afford thousands of dollars to pay an Attorney or Loan Modification Company. When going through this process you do not have a lot of time. Have your financial work sheets done correctly by our experienced loan processors.
We have over 4 years of loss mitigation and 15 years of mortgage banking experience.
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What is a Loan Modification?
Whether it's called a loan modification, mortgage modification, restructuring, or workout plan, it's when a borrower who is facing great financial hardship, having difficulty making their mortgage payments and is facing foreclosure, works with their lender to change the terms of their mortgage loan to make it affordable. The workout plan varies by lender, but changes could include temporary or permanent changes to the mortgage rate, term and monthly payment of the loan, the past due amount could be rolled into the loan, and the new balance re-amortized.
What is a loan modification under Obama's plan?
Under the Homeowner Affordability and Stability Plan President Barack Obama announced on Feb. 18, 2009, the goal of Obama's "Make Home Affordable" loan modification plan is to reduce the amount struggling homeowners owe per month to sustainable levels. According to plan details:
- The lender would first be responsible for bringing down interest rates so that the borrowers monthly mortgage payment is no more than 38 percent of his or her income.
- Next, the initiative would match further reductions in interest payments dollar-for-dollar with the lender to bring that ratio down to 31 percent.
- Lenders will also be able to bring down monthly payments by reducing the principal owed on the mortgage, with Treasury sharing in the costs.
- Borrowers will be put on a trial modification at the new interest rate and payment for three months. If they make all their payments on time, the modification will be implemented at the new rate and be fixed for five years.
Under Obama's plan, loan modifications will be standardized, with uniform loan modification guidelines used by Fannie and Freddie Mac, and then they will be implemented throughout the entire mortgage industry.
Who is eligible for a loan modification?
To qualify, you must:
- Have originated your mortgage before Jan. 1, 2009.
- Have an unpaid balance that is equal to or less than $729,750 (for a single-family home).
- Have trouble paying your mortgage due to financial hardship. That could be because you have had an increase in your mortgage payments, or because your income was reduced or you suffered a hardship (like medical problems) that increased your bills, or, you can show that you soon will be unable to make your payments. You will be required to enter an affidavit of financial hardship.
- Your monthly mortgage payment must also be more than 31% of your gross (pre-tax) monthly income.
According to the Department of Treasury: Anyone with high combined mortgage debt compared to income or who is underwater (i.e., has a combined mortgage balance higher than the current market value of his house) may be eligible for a loan modification. This initiative will also include borrowers who show other indications of being at risk of default. New borrowers will be accepted until Dec. 31, 2012.
How does someone get a loan modification?
First, gather this information:
- A hardship letter explaining your current financial hardship
How do loan modifications benefit lenders and borrowers?
A loan modification is usually a win-win situation: the lenders get their money in a reworked fashion and borrowers get a new chance to support their mortgage payments at a reduced cost.
Also, under the Obama plan, there are incentives for both lender and borrower. According to the Treasury:
- Pay for Success Incentives to Servicers: Servicers will receive an up-front fee of $1,000 for each eligible modification meeting guidelines established under this initiative. They will also receive pay for success fees awarded monthly as long as the borrower stays current on the loan of up to $1,000 each year for three years.
- Incentives to Help Borrowers Stay Current: To provide an extra incentive for borrowers to keep paying on time, the initiative will provide a monthly balance reduction payment that goes straight towards reducing the principal balance of the mortgage loan. As long as a borrower stays current on his or her loan, he or she can get up to $1,000 each year for five years.
- Reaching Borrowers Early: To keep lenders focused on reaching borrowers who are trying their best to stay current on their mortgages, an incentive payment of $500 will be paid to servicers, and an incentive payment of $1,500 will be paid to mortgage holders, if they modify at-risk loans before the borrower falls behind.
- Home Price Decline Reserve Payments: To encourage lenders to modify more mortgages and enable more families to keep their homes, the Administration -- together with the FDIC -- has developed an innovative partial guarantee initiative. The insurance fund to be created by the Treasury Department at a size of up to $10 billion will be designed to discourage lenders from opting to foreclose on mortgages that could be viable now out of fear that home prices will fall even further later on. Holders of mortgages modified under the program would be provided with an additional insurance payment on each modified loan, linked to declines in the home price index.
Also, banks would rather have you stay in your home than risk foreclosure since they stand to lose more money through foreclosure. Think about it: a bank would need to make any repairs to the home, pay real estate agents to list it, and then perhaps list it at a discounted price. And, if the real estate market is slow, the price could be further reduced.
Speak with your financial services representative to further discuss your eligibility and enrollment in the loan modification program. Those attempting to modify their home loan without the help of a qualified professional may experience unecessary delays and frustration. Employing a qualified professional ensures you that your modification will be considered and approved in the shortest time possible. Do not take chances when you are dealing with your most important asset, your home.
Call Nationwide Mortgage Processing Today (888) 707-1003
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