More than 1 in 8 homeowners are upside-down on the mortgage and don’t know
what to do. The search for a solution can be filled with misinformation and fraud,
and often adds more frustration to this difficult situation.
If you or someone you know is among the many homeowners who owe more money on their home than it’s worth, know that there are options available. You need the facts.
Being educated in today’s shifting market is the most important safeguard you can take in preventing lost opportunities and avoiding scams.
Your first step as a homeowner in trouble is understanding all your options, including a mortgage modification. Should you qualify, a mortgage modification is an ideal solution for you and your lender. The average foreclosure can cost a lender from 35-50% of the value of a property (or more), so keeping a borrower in their home is a better alternative for both parties. Find out if a mortgage modification is the right option for you and get back on track to a secure, stable financial future.
WHAT IS A MODIFICATION?
A mortgage modification is a process through which your mortgage lender changes:
- Your interest rate
Your principal balance (through a reduction)
This process will often allow a borrower who can no longer afford their home at their current mortgage payment to stay in their property. A mortgage modification is ideal for homeowners experiencing a rate increase or a salary decrease, placing the mortgage payments just out of reach.
HOW TO QUALIFY FOR A MODIFICATION AND WHAT DO I NEED?
According to the Obama administration’s Making Home Affordable program’s website
(www.MakingHomeAffordable.gov), you will need the following information for your lender to consider a modification:
· Information about your first mortgage, such as your monthly mortgage statement
· Information about any second mortgage or home equity line of credit (HELOC) on the house
· Account balances and minimum monthly payments due on all of your credit cards
· Account balances and monthly payments on all other debts, such as credit cards,student loans and car loans
· Your most recent income tax return
· Information about your savings and other assets
· Information about the monthly gross (before tax) income of your household, including ecent pay stubs if you receive them or documentation of income you receive from other sources
It may be helpful to have a letter of hardship describing any circumstances that caused your income to be reduced or expenses to be increased (i.e. employment reduction, sudden illness, divorce, etc.)
The first call you make should be to your lender. Have the information listed above ready to discuss with them, and call your customer service line to ask them what options you have available. Different lenders have different names for the department that handles these issues, such as:
- Loss Mitigation Department
- Mortgage Modification Department
- H.O.P.E. Department
If Fannie Mae or Freddie Mac owns your mortgage, you may be eligible for a Home Affordable Refinance. This will allow you to refinance your home and often lower your payments.
You should start by visiting: www.MakingHomeAffordable.gov
Also, check the list of HUD–approved counsellors provided in this document for organizations approved to work with borrowers by the federal government’s Hope Now Alliance.