{"id":3287,"date":"2021-07-29T13:52:47","date_gmt":"2021-07-29T13:52:47","guid":{"rendered":"https:\/\/hsapclaw.com\/?p=3287"},"modified":"2023-04-28T20:12:23","modified_gmt":"2023-04-28T20:12:23","slug":"understanding-loan-modification-process","status":"publish","type":"post","link":"https:\/\/hsapclaw.com\/understanding-loan-modification-process\/","title":{"rendered":"Understanding Loan Modification Process"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Are you suffering from financial hardship due to a sudden loss of job, serious illness, costly medical bills, or excessive debts? These might be some of the reasons why you fail to make monthly mortgage payments on time. If you\u2019re struggling to pay off your mortgage according to the original home loan payment agreement, you can consider filing for a <\/span><b>loan modification<\/b><span style=\"font-weight: 400;\">. The goal of a loan modification is to help a troubled homeowner catch up on any past-due mortgage payment and avoid foreclosure. A <\/span><a href=\"https:\/\/hsapclaw.com\/\"><span style=\"font-weight: 400;\">competent Royal Oak bankruptcy attorney<\/span><\/a><span style=\"font-weight: 400;\"> can help you determine if a loan modification can help you ease your financial burden. The article will answer the following questions to help you understand how loan modification works:<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">What is a Loan Modification?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">How Do I Qualify for a Mortgage Loan Modification?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">How Do I Apply for a Loan Modification?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Is Loan Modification Good For Me?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">How Does a Mortgage Loan Modification Affect My Credit?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">What are the Different Mortgage Modification Programs?<\/span><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_is_a_Loan_Modification\"><\/span><span style=\"font-weight: 400;\">What is a Loan Modification?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2><div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<label for=\"ez-toc-cssicon-toggle-item-662961f63ae7f\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-662961f63ae7f\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/hsapclaw.com\/understanding-loan-modification-process\/#What_is_a_Loan_Modification\" title=\"What is a Loan Modification?\">What is a Loan Modification?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/hsapclaw.com\/understanding-loan-modification-process\/#How_Do_I_Qualify_for_a_Mortgage_Loan_Modification\" title=\"How Do I Qualify for a Mortgage Loan Modification?\">How Do I Qualify for a Mortgage Loan Modification?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/hsapclaw.com\/understanding-loan-modification-process\/#How_Do_I_Apply_for_a_Loan_Modification\" title=\"How Do I Apply for a Loan Modification?\">How Do I Apply for a Loan Modification?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/hsapclaw.com\/understanding-loan-modification-process\/#Is_Loan_Modification_Good_For_You\" title=\"Is Loan Modification Good For You?\">Is Loan Modification Good For You?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/hsapclaw.com\/understanding-loan-modification-process\/#How_Does_a_Mortgage_Loan_Modification_Affect_Your_Credit\" title=\"How Does a Mortgage Loan Modification Affect Your Credit?\">How Does a Mortgage Loan Modification Affect Your Credit?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/hsapclaw.com\/understanding-loan-modification-process\/#What_are_the_Different_Mortgage_Modification_Programs\" title=\"What are the Different Mortgage Modification Programs?\">What are the Different Mortgage Modification Programs?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/hsapclaw.com\/understanding-loan-modification-process\/#The_Role_of_a_Bankruptcy_Attorney_in_Loan_Modification\" title=\"The Role of a Bankruptcy Attorney in Loan Modification\">The Role of a Bankruptcy Attorney in Loan Modification<\/a><\/li><\/ul><\/nav><\/div>\n\n<p><span style=\"font-weight: 400;\"><img loading=\"lazy\" decoding=\"async\" class=\"alignright wp-image-3198 size-fusion-400\" title=\"Royal Oak Bankruptcy Attorney\" src=\"https:\/\/hsapclaw.com\/wp-content\/uploads\/2021\/04\/File-Chapter-7-Bankruptcy-400x225.jpg\" alt=\"Royal Oak Bankruptcy Attorney\" width=\"400\" height=\"225\" srcset=\"https:\/\/hsapclaw.com\/wp-content\/uploads\/2021\/04\/File-Chapter-7-Bankruptcy-200x112.jpg 200w, https:\/\/hsapclaw.com\/wp-content\/uploads\/2021\/04\/File-Chapter-7-Bankruptcy-300x169.jpg 300w, https:\/\/hsapclaw.com\/wp-content\/uploads\/2021\/04\/File-Chapter-7-Bankruptcy-400x225.jpg 400w, https:\/\/hsapclaw.com\/wp-content\/uploads\/2021\/04\/File-Chapter-7-Bankruptcy-600x337.jpg 600w, https:\/\/hsapclaw.com\/wp-content\/uploads\/2021\/04\/File-Chapter-7-Bankruptcy.jpg 626w\" sizes=\"(max-width: 400px) 100vw, 400px\" \/>A loan modification is considered the most common type of<\/span><b> loss mitigation<\/b><span style=\"font-weight: 400;\">. Although a loan modification may be made for any type of loan, they are most common with secured loans such as mortgages. In this process, a homeowner\u2019s mortgage is modified, with both the creditor and homeowner being bound to new loan terms. Loan modification aims to make your mortgage payments more affordable.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A loan modification is a change made to the terms of an existing loan by a lender. It may involve a reduction in the interest rate, an extension of the length of time for repayment, a different type of loan, or any combination of the three. Such changes are usually made because the borrower is unable to repay the original loan.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"How_Do_I_Qualify_for_a_Mortgage_Loan_Modification\"><\/span><span style=\"font-weight: 400;\">How Do I Qualify for a Mortgage Loan Modification?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The qualifications for a home loan modification may vary depending on the guidelines of the mortgage lender and the type of loan. These are typically based on the amount that you owe, the property being used for collateral, and specific features of the collateral property. Not all debtors who struggle financially can be entitled to a loan modification. <\/span><a href=\"https:\/\/hsapclaw.com\/attorneys\/\"><span style=\"font-weight: 400;\">An experienced Royal Oak bankruptcy attorney<\/span><\/a><span style=\"font-weight: 400;\"> can help you determine if a loan modification will work best for you. To qualify for a home mortgage modification, you need to prove that:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">you&#8217;ve suffered from financial hardship (divorce, job loss, or disability)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">the house is your primary residence (homeownership)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">that your gross monthly income is just enough to make regular monthly payments under a modification<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Before the approval of a loan modification, you need to undergo a trial period plan (usually 3 months) to show that you can afford the modified amount under the <\/span><b>new mortgage <\/b><span style=\"font-weight: 400;\">terms.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"How_Do_I_Apply_for_a_Loan_Modification\"><\/span><span style=\"font-weight: 400;\">How Do I Apply for a Loan Modification?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">A mortgage loan modification application will require you to declare your financial information (proof of income, auto loan, or <a class=\"linkilo_keyword_link  hyperlinks\" href=\"\/credit-card-debt\/\"  rel=\"dofollow\" title=\"credit card debt\" data-linkilo-keyword-link=\"linked\">credit card debt<\/a>), residential mortgage information, and the specifics of the <\/span><b>hardship<\/b><span style=\"font-weight: 400;\"> situation. To apply for a mortgage modification, you have to get in touch with your servicer\u2019s home retention department to request loss mitigation. You need to include the following details in your application:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">personal information<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">property information<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">bank statements<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">recent payslips or pay stubs<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">a hardship letter or affidavit<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">tax returns<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Is_Loan_Modification_Good_For_You\"><\/span><span style=\"font-weight: 400;\">Is Loan Modification Good For You?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Knowing the possible outcomes and effects of <\/span><b>mortgage modification<\/b><span style=\"font-weight: 400;\"> can help you decide whether it is the right option for you. Loan modification comes with both advantages and disadvantages. There are some major benefits to modifying your loan if your situation qualifies you. A mortgage adjustment can:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><a href=\"https:\/\/hsapclaw.com\/save-your-home-from-foreclosure\/\"><span style=\"font-weight: 400;\">Stop foreclosure or prevent the foreclosure process<\/span><\/a><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Lower your monthly mortgage payment<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Help you catch up on any late payments<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Resolve delinquency status<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Cause lesser damage to your credit than a foreclosure<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">On the other hand, there are some disadvantages of the <\/span><b>loan modification process<\/b><span style=\"font-weight: 400;\">. Modifying your loan can:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><a href=\"https:\/\/hsapclaw.com\/rebuilding-credit-faster-how-you-can-improve-your-credit-score\/\"><span style=\"font-weight: 400;\">Hurt your credit score<\/span><\/a><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Raise your total loan amount<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Require you to pay extra fees<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Be reported as debt settlement<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Show that you didn&#8217;t fulfill your mortgage contract<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Still result in foreclosure, depending on your lender<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"How_Does_a_Mortgage_Loan_Modification_Affect_Your_Credit\"><\/span><span style=\"font-weight: 400;\">How Does a Mortgage Loan Modification Affect Your Credit?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Creditors may have the right to report your loan modification request to the national credit bureaus. Its appearance on your credit report could adversely affect your credit score. The long-term effect of a mortgage modification typically will be less severe and long-lasting than the damage done by foreclosure.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In the case of mortgage modification programs that require you to be delinquent on your payments to qualify, your credit report will reflect missed payments in addition to the modification. If a mortgage modification works as planned, it will allow you to keep your home. Once you can resume on-time mortgage payments, you will be well-positioned to <a href=\"https:\/\/hsapclaw.com\/rebuild-your-credit-after-bankruptcy\/\">rebuild your credit<\/a> and improve your credit score within a few years. However, for homeowners on the brink of losing their homes, the benefits of a loan modification can far outweigh the potential credit risks and extra interest.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_are_the_Different_Mortgage_Modification_Programs\"><\/span><span style=\"font-weight: 400;\">What are the Different Mortgage Modification Programs?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Nowadays, most lenders and loan servicers offer several loan modification assistance programs. Depending on the circumstance and type of your mortgage, you may be eligible for a government loan modification program.\u00a0 Several options can be offered for borrowers with VA-guaranteed, <\/span><b>Fannie Mae and Freddie Mac<\/b><span style=\"font-weight: 400;\">, FHA-insured, and USDA mortgages. For instance, if your mortgage is owned or guaranteed by either Fannie Mae or Freddie Mac, you may qualify for this program.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"The_Role_of_a_Bankruptcy_Attorney_in_Loan_Modification\"><\/span><span style=\"font-weight: 400;\">The Role of a Bankruptcy Attorney in Loan Modification<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Before you apply for a loan modification, it is important to have enough knowledge regarding loss mitigation laws and the mortgage modification process. Therefore, it is advisable to schedule a consultation with our reliable Royal Oak bankruptcy attorneys at Hammerschmidt Stickradt &amp; Associates. Our <\/span><a href=\"https:\/\/hsapclaw.com\/contact\/\"><span style=\"font-weight: 400;\">bankruptcy law firm<\/span><\/a><span style=\"font-weight: 400;\"> will help you know if a loan modification is more ideal given your situation.<\/span><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Are you suffering from financial hardship due to a sudden loss of job, serious illness, costly medical bills, or excessive debts? These might be some [&hellip;]<\/p>\n","protected":false},"author":8,"featured_media":3198,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4,5],"tags":[],"_links":{"self":[{"href":"https:\/\/hsapclaw.com\/wp-json\/wp\/v2\/posts\/3287"}],"collection":[{"href":"https:\/\/hsapclaw.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hsapclaw.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hsapclaw.com\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/hsapclaw.com\/wp-json\/wp\/v2\/comments?post=3287"}],"version-history":[{"count":3,"href":"https:\/\/hsapclaw.com\/wp-json\/wp\/v2\/posts\/3287\/revisions"}],"predecessor-version":[{"id":4243,"href":"https:\/\/hsapclaw.com\/wp-json\/wp\/v2\/posts\/3287\/revisions\/4243"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/hsapclaw.com\/wp-json\/wp\/v2\/media\/3198"}],"wp:attachment":[{"href":"https:\/\/hsapclaw.com\/wp-json\/wp\/v2\/media?parent=3287"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hsapclaw.com\/wp-json\/wp\/v2\/categories?post=3287"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hsapclaw.com\/wp-json\/wp\/v2\/tags?post=3287"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}