Loan Modification Process

Helping You with the Loan Modification Process in Los Angeles

Obtaining a loan modification may seem like a difficult, if not impossible task that gets harder each month as property values rise and interest rates do, too. Even with recent legislation designed to assist homeowners, lenders and loan servicers still find ways to make it difficult for borrowers to obtain a reasonable modification. This is because loan servicers make more money when you default and even more money when they foreclose. They don’t want to lose money by helping you catch up and avoid default and foreclosure

When you are unfairly denied a loan modification from your lender, our lawyers at Advocate Legal can protect your rights and your home by filing a lawsuit against your servicer and using it to get you a modification. A modification attorney uses lender violations in the modification process as leverage to force lenders to give you what they wouldn’t give you willingly. We provide skilled, aggressive representation and are highly successful at securing modifications as settlement.

For veterans, there are extra benefits including priority attention from the Consumer Financial Protection Bureau and a specific program in California called Cal Vet Modification.

Who doesn’t qualify for a loan modification and who does?

Borrowers who can afford their mortgage, but simply want a lower interest rate, don’t qualify for a loan modification. Borrowers with equity in their property also don’t qualify and must refinance instead of modify since equity negates the concept of hardship.

Homeowners with a high interest rate or a principal balance that is more than the value of the property will qualify for a loan modification if they can’t afford their monthly house payments.  Homeowners will also qualify for loan modification if they have faced significant financial hardships that make it difficult or impossible to make timely payments on their mortgage.

The definition of financial hardship is loose and includes such things as job loss or salary reduction, a decrease in property value, the loss of a wage earner, unexpected medical costs, or payment shock when an interest rate suddenly adjusts. Contrary to what you may have been told, you don’t have to be behind on your mortgage payments to qualify for a loan modification.

The Home Affordable Modification Program (HAMP)

You may qualify for HAMP if the following criteria apply:

  • You obtained your mortgage on or before Jan. 1, 2009.
  • You owe up to $729,750 on your primary residence or single-unit rental property.
  • You owe up to $934,200 on a two-unit rental property; $1,129,250 on a three-unit rental property; or $1,403,400 on a four-unit rental property.
  • The property has not been condemned
  • You have a financial hardship and are either delinquent or in danger of falling behind on your mortgage payments (non-owner occupants must be delinquent in order to qualify).
  • You have sufficient, documented income to support a modified payment.
  • You must not have been convicted within the last 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.

Additional Loan Modification Programs

Even if a borrower does not qualify for a HAMP modification, there are other options to pursue with your lender based on the strength of the new foreclosure statutes designed to aid consumers and reduce foreclosures. Options may include an application for federal and state government loan modification assistance and other programs:

  • Lower interest rates — Borrowers in variable-rate loans that are higher than the current interest rate may apply for a fixed-rate mortgage that will be lower than the variable rate through the Making Homes Affordable Refinance Program. This is a good option for homeowners who are not (yet) behind on payments but cannot get traditional refinancing because of a decline in the value of their homes.
  • Mortgage principal reductions — When homeowners have a second mortgage and the principal balance on both loans is less than the value of their property, they may be able to negotiate a settlement for their second lien and thereby reduce the total principal balance. Reducing the principal on a second or third mortgage, and first mortgages in certain cases may make it possible for homeowners to make timely payments and avoid foreclosure.
  • Forbearance (recapitalization) — When homeowners have missed mortgage payments, lenders may consider adding the unpaid months to the balance of the mortgage instead of foreclosing, or temporarily suspending monthly mortgage payments because of hardship to allow the homeowner to catch up. Sometimes suspension suffices to help the homeowner stay current.
  • Extended loan terms — Extending the number of years a homeowner has to pay back a mortgage allows homeowners to reduce their monthly payments.

Contact an Attorney Who Cares About Your Home and Your Future

Although it may seem impossible, modifications are obtainable, especially when you have a diligent and tenacious attorney on your side. The lawyers at Advocate Legal are devoted to obtaining justice on behalf of our clients.