Tuesday, August 1, 2017

Important Information Concerning Loan Modification Oakland

By Amy Brooks

Loan modification basically refers to the process of restructuring mortgages through altering terms on which borrowed loans were acquired to allow for more affordable repayments. For example, lenders can lessen the interest rates to accommodate affordable monthly payments. One can as well have their principal balances cut. The lending institutions do loan modification Oakland to prevent instances of foreclosure that can cause a lot of l pressure to borrowers.

Basically, modifying loans do not only involve reduction of the interest rate but also extending the period of the loan returns or even introducing a new kind of loan repayment plan. Any of those may be done or even the three procedures combined. Modifying loans tends to be easier than defaulting it hence the popularity of the process.

Generally modifying loans and a forbearance agreement are almost conflicting but they are different. A forbearance agreement is short term and offers solution to borrowers who are temporarily unable to repay a debt whereas the modification agreement is long-term as the borrower is totally unable to ever repay an already existent loan.

The process has existed from the 1930s. During the period of Great Depression, for instance, the process of modifying loans was implemented at state levels to prevent any debt foreclosures. In the twenty-first century period of the Great Recession, national policy issues, as well as various actions were adopted to alter the terms on mortgage loans to create stability in the economy.

There are various reasons why one may delay in making their mortgage payment. For example due to job loss, divorce, sickness among others. Therefore, it is usually important to know how the modification process works and what program to consider. This is because some modification programs may cost you more eventually. There is a program known as Home Affordable Modification program or the HAMP. This was formed and sponsored by the federal government in 2009.

The advantages offered by HAMP include decreased interest rates of up to 2%, diminished monthly payment up to 31% of gross monthly income, offering forbearance and ridding you off the remaining principal balance. Your debt is effortlessly changed under HAMP so long as you meet the standard criteria. Nevertheless, you ought to be in default of your mortgage and your monthly payment needs to be above 31% of your gross monthly income.

The other requirement usually pertains to the clients having undergone some hardships like the loss of employment, divorce, sickness and so on. Nonetheless, you need to have sufficient amounts to effect the modified amounts hence pay stubs and tax returns need to be provided. Finally, a four month trial duration is usually awarded.

In the case where you are having trouble making mortgage payments, one may seek help from a mortgage specialist that deals with the modifications process. They work closely with borrowers who are having trouble repaying their mortgage loans and hence are made aware of the best program to use.

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