Frequently Asked Questions
Q. What is a loan modification?
A: A modification is a change to the original mortgage terms. It may include a change to the product (an ARM to a fixed rate mortgage), interest rate, amortization term and maturity date, and/or unpaid principal balance. The change/s is made to create a more affordable payment for the borrower.
Q: What is a successful loan modification?
A: A successful loan modification is a modification creating a monthly mortgage payment that is sustainable for a troubled borrower by targeting a benchmark ratio of housing payment to monthly gross household income.
Loan Modifications: Detroit and Michigan Houses
Although some good news is beginning to show in the housing crisis, people still struggle to keep their homes in Michigan. In that state, foreclosure projections between 2009 and 2012 are at 325,917.*A loan modification in Michigan can be a difficult and painstaking process, if you don’t know what to do or who to turn to. Convincing the lender to modify the loan to prevent foreclosure is only one part in the battle to keep your home. The rest of the effort is following very specific instructions. There are a number or rules and requirements, and if a single step is missed or done incorrectly, the process can be delayed to the point where foreclosure becomes a reality. National Loan Restructuring is well versed in negotiating with lending institutions to help modify your mortgage so you can avoid foreclosure.
If you’re considering loan modification, the Federal government approves only those homeowners considered at risk” of foreclosure.
At risk means:
- The homeowner must be experiencing serious hardship, including having trouble making the mortgage payments, unemployment, health problems or other issues.
- The homeowner must have a high mortgage debt-to-income ratio (exceeding 31%). This includes principal, interest, insurance and association dues.
- The homeowner must be able to prove financial hardship – whether due to loss of income, significant increase of mortgage interest, etc. Paystubs, W-2 forms, and tax returns as well as any other documentation can support the hardship claim.
- The homeowner must be at imminent risk of default. It’s not necessary for the payments to be in arrears.
Other requirements:
- The homeowner must live on the property as the primary residence.
- The primary mortgage amount may not exceed $729,500.
- The current mortgage must have been obtained prior to January 1, 2009.
- If the total household debt – including loans, credit cards and alimony – is more than 55% of total household income, the homeowner must obtain debt counseling.
National Loan Restructuring specializes in helping homeowners avoid foreclosure by negotiating with your lending institution by all available means. We manage loan modifications all over Michigan, including Oakland, Livingston, Macomb, Lapeer and Genesee counties.
For more information, or to see if you qualify for a Michigan loan modification, call one of our specialists at 877.216.6792.