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.
Short Sale versus Foreclosure: Detroit and Michigan Homes
For homeowners struggling with mortgage payments, it might be tempting to allow the house to go into foreclosure. However, listing the house for a short sale might save you the long-term repercussions that foreclosure brings. Both options have their advantages and disadvantages. But, which to choose: Cut your losses with a short sale, or walk away while your house goes into foreclosure, and probably owe even after the house is sold? Choosing between them is a dilemma faced by many these days. If you’re trying to decide which one would be more appropriate for your situation, read on.Fact: Michigan is among the hardest hit states in the housing finance crisis. According to a report by Responsible Lending (www.responsiblelending.org), at the end of the third quarter of 2009, foreclosure properties totaled 64,229 and past-due mortgages totaled 244,884.
Short Sale vs. Foreclosure
A pre-foreclosure or “short sale,” simply put, is the sale of a property whose proceeds fall “short” of the balance of the loan. When a short sale is negotiated, the agreed upon price is what the lender accepts as “payment in full.” Short sales in Michigan are conducted much like any home sale: The homeowner is in charge of the sale – not the lender; it does not have the derogatory effect on the homeowner’s credit score as a foreclosure will, although some drop in credit score has been reported. It helps to be current on your payments, if you wish to go the route of a short sale. The more you fall behind in your payments, the less likely the lender will agree to it. In Michigan, short sales are conducted under specific rules. Speak with a specialist at National Loan Restructuring to help you avoid foreclosure.
Foreclosure is, more or less, the repossession of real estate for defaulting on the loan. The lender seizes the property with the intention of selling it for as much as possible, which is usually much less than the loan balance. The balance of the loan after the sale becomes the responsibility of the borrower to pay back. Not only that, the repercussions of a foreclosure can cling to the homeowner’s credit report for up to ten years. Of either option discussed here, foreclosure is by far the worst. When faced with these facts, a short sale is the best option.
National Loan Restructuring specializes in helping homeowners avoid foreclosure by negotiating with your lending institution by all available means. . We manage loan restructuring all over Michigan, including Oakland, Livingston, Macomb, Lapeer and Genesee counties, with a heavy emphasis on Detroit.