Once upon a time, only the rich and famous were able to buy homes. Then, mortgages and loans changed, and anybody could apply for one and be accepted. But then the Great Recession happened, and people got into real difficulties, facing the prospect of foreclosure. Thankfully, the Obama Administration became aware of this and ensured people could apply for home loan modifications in certain circumstances. Companies like Golden State Financial Group were formed in order to help people get accepted.
Golden State Financial Group on the Aims of Loan Modifications
If you find yourself in a situation where you can no longer afford the monthly payments on your loan, then you are likely to need a modification. There are numerous ways in which a loan can be modified, including:
- Stopping the interest rate from being adjusted upward.
- Extending how long you have to repay the loan.
- Decreasing your outstanding balance.
- Adding missed payments to the main balance.
- Eradicating the term of negative amortization.
That said, it isn’t up to you, as a borrower, to determine how your loan will be modified. Your lender has to be willing, for starters, and they will do all they can to make sure that they get their money back. Unfortunately for lenders, the Obama Administration put regulations in place meaning they almost had to accept loan modification, and this meant that they started to reduce the main balance of outstanding loans. The consequence of this, meanwhile, was that overall property values started to decline. And, worryingly, the US Comptroller for the Currency has reported that, in instances where the rate was modified, delinquency increased.
Of course, for you as a borrower, what matters is that you don’t lose your home. What you need to know is how you can apply for a modification and how it can help you. The best way to do this is to work with a company like Golden State Financial Group. They will contact the loss mitigation section with your bank and receive the necessary application form. They will work with you to determine which documents you have to supply, such as hardship letters, tax returns, and bank statements. As a result of this, the lender is likely to contact you asking for a proposal for modification on your part. If you work with a professional agency, you have more chances of this request being sent out. Work on your own, and it is likely that the lender will simply decline your request.
A loan modification system is out there to help you. But you as a borrower must be responsible and see this for what it is: a helping hand. It is not an easy way out, and it is also not guaranteed that you will be granted a modification. Make sure, therefore, that you know what you are doing and what your lender’s criteria are, so that you are more likely to be successful in your application.