According to the U.S. Department of Housing and Urban Development a loan modification is a permanent change in one or more of the terms of a mortgagor’s loan, which allows a loan to be reinstated and results in a payment the mortgagor can afford.
Because a loan modification is designed to help struggling homeowners keep their homes certain requirements are mandated.
A loan modification:
must result in a fixed rate loan
must fully reinstate the loan
must include all unpaid past due payments
must waive any unpaid late fees
may result in a permanent change of interest rate
may extend the loan term
Procedures for a Loan Modification
We are required to assess your financial condition.
We perform a retroactive escrow analysis at the time the loan modification to ensure that the delinquent payments being capitalized reflect the actual escrow requirements required for those months capitalized.
We must verify the property has no adverse physical conditions.
Home repair costs may not be calculated into the Loan Modification.
Mortgagee must comply with State and Federal disclosure laws or notice requirements, including whether recordation is necessary to maintain first lien position requirement.
Loans reinstated using a Loan Modification within the past 3 years requires written justification prior to a subsequent modification.
Subsequent reason for default cannot be related to the previous reason for default.
For a complete explanation on these or any other loan modification questions you may have please contact us at 859-253-5363 and speak with one of our loan modification specialists today.