What is a loan modification foreclosure?

A mortgage loan modification is one of the most common types of loss mitigation, the term for techniques to prevent a foreclosure. The modification changes the original terms of the promissory note to reduce the amount of the monthly payments, usually while lengthening the term of the mortgage to compensate.

Can a home loan modification keep you out of foreclosure?

If you can’t afford your mortgage payments, getting a loan modification just might keep you out of foreclosure. Your eligibility for a modification is determined by the investor’s set of guidelines—not everyone will qualify.

How do you get approved for a loan modification?

Your eligibility for a modification is determined by the investor’s set of guidelines—not everyone will qualify. While it’s mostly a numbers game that looks at your income, loan payment, and financial circumstances, you can help or hurt your chances of getting approved for a modification with your actions (or inaction) during the process.

Can a mortgage servicer make a wrong loan modification?

Mortgage servicers handle loan modification applications from homeowners. Unfortunately, servicers sometimes make serious errors when processing modification requests. These mistakes can cause many problems for a homeowner, like missing out on getting the loan modified or even a wrongful foreclosure.

When does a home loan modification take effect?

If you remain in good standing, the principal reduction takes permanent effect after three years, and thereafter you do not have to repay the forgiven portion of the debt. You do have to repay the forgiven portion of the debt if you sell your home within three years of the modification.

When to apply for a home loan modification?

If you are behind on your payment or facing foreclosure, applying for a loan modification places a temporary halt on the foreclosure process. In order for your loan to qualify for modification under HAMP, the following conditions must apply: You obtained your mortgage on or before January 1, 2009.

Can a Bank refuse to do a loan modification?

However, what seems to be happening is that the banks are taking the money in the trial period, and then refusing to do the permanent mortgage modification. Instead, they are choosing to move forward with the foreclosure.

How does a loan modification work with one servicer?

A homeowner gets a loan modification with one servicer and makes trial payments. The servicer advises the homeowner that it is switching servicing rights to another servicer. The new servicer claims to know nothing about the modification and delays the homeowner for months waiting to get the relevant “paperwork.”