According to Hope Now, more and more Americans facing foreclosure are turning to permanent loan modifications. In fact, 26,000 homeowners obtained permanent loan modifications in January 2016 from proprietary programs and the Federal Home Affordable Modification Program. Loan modifications are sought out by borrowers as an alternative to foreclosure, and involve restructuring the loan to reduce the amount of monthly payments. Given the fact that these modifications are on the rise, it is important that buyers be well educated about them.
Obtaining a Permanent Loan Modification
For homeowners seeking a permanent loan modification, it is advisable to seek out the expertise of an attorney who processes loan modifications. A permanent loan modification always starts with approval from the lender, but that is not the end of the process. Before it can actually be granted, borrowers typically must go through a trial period to ensure payments are made in a timely manner. For HAMP loans however, this step is always required. If payments are made on time for the duration of the trial period which is usually 90 days, the modification is made permanent. To finalize the process, the lender will require the borrower to sign a formal agreement.
What Borrowers Need to Know
While the benefit of permanent loan modifications is clear (decreased monthly payments), the dangers they present are something many borrowers are unaware of. One concern is the impact that a loan modification could have on a borrower’s credit. Lenders may require that several mortgage payments be missed before a modification can be obtained. This, of course, leaves a mark on one’s credit report, which can remain for up to seven years. When the homeowner doesn’t utilize an attorney throughout this process, even more complications can arise. Many banks will proceed with foreclosure suits while the modification is being processed. The right Miami foreclosure attorney can mitigate the risk of this happening.
If you are interested in learning more about foreclosure alternatives, give the team at Graham Legal a call today for a free consultation.