Here are 11 quick facts everyone should know about the modification process
1. Loan modification is an agreement created in lieu of foreclosure between a lender and a borrower who experiences inability to make their existing mortgage payments.
2. A modification can be in the form of interest rate reductions, loan term extensions, developing a new loan or a combination of the three.
3. Loan modifiers act as a liason between the the lender and the borrower to form an agreement that is beneficial to both parties.
4. Loan modification can effectively stops the foreclosure process and protects credit history.
5. In many cases it costs the banks less to work with borrowers and modify their loan than it does to foreclose and sell the property at deflated rates. This makes many banks receptive to negotiations and willing to participate in modification.
6. There is a possibility of reversing the process until a foreclosure sale of the property occurs. However it is important to note that the sooner you contact someone for help the easier it makes the process.
7. Modifying a loan is not the same as refinancing one. Refinancing a loan is essentially starting the loan process over again, which can result in new closing & legal fees, appraisals and taxes. Whereas loan modification takes your existing loan and modifies it to achieve a fixed rate and to better suit the borrowers financial circumstances.
8. Depending upon your stage of foreclosure, your financial position and the lender itself, it can take anywhere from a week to 6 weeks to complete the modification process.
9. To be a qualified applicant you must own and occupy the property and the loan must be dated before Jan 1 2009 & have less than the following amounts in principal still to be paid:
1 Unit - $729,750
2 Units - $934,200
3 Units - 1,129,250
4 Units - 1,403,400
10. Documents you may require to complete the loan modification process include:
Federal Income Tax Returns & Schedules for the last two years
Bank statements for the last year
Payroll stubs for the last year
Lender statements for the last year
Homeowners insurance certification
Any relevant letters of correspondence with lenders
Any relevant letters of correspondence with attorneys
A record of monthly expenses for the past 6 months
11. The mortgage industry is suspect to most Americans right now, and there will always be individuals and companies looking to exploit the resulting problems for homeowners & borrowers. Beware of companies who look to make a profit from your situation, hiring a seasoned lawyer to handle the process is prudent and ensures the process is completed within the law.
A Little Help These are just a few quick facts to get people started. We have entered uncertain financial times and more and more people are facing foreclosure on their homes. There are options that won't destroy your credit.
Loan modifications are becoming mainline mortgage business these days. However, this is not a routine business or sales process for your average mortgage broker, lender, or even servicer. As such, it requires a very different work flow and fulfillment process to create a stable business out of mortgage loan modifications.
These unique mortgage workout programs are becoming enormously popular and necessary with emphasis from the US government and big banks advocating foreclosure prevention. These influences are making mortgage businesses consider enhanced loss mitigation strategies.
You can improve your chances of success using this simple 5 step lead management process:
Identification of Loan Modification Candidates
Granted, many of the loss mitigation and mortgage modification clients are already in trouble and seeking help. This is going to bring many of these potential clients to your front door. However, if you really want to help the bigger problem of foreclosure prevention you should identify at risk clients.
Start this process by filtering for past clients and deals you have written. Using a well considered plan and process is key to providing quality service. Keep a close eye on clients with adjustable rate, interest-only, and option ARM mortgages. Customers and past clients will be relieved and thankful for notifications of their potential risk.
Contact and Notify Potential Modification Client
Now that you know who your at risk clients are, or possibly you have purchased loan modification leads, it is important to have a solid contact strategy.
Using marketing automation to blend email and direct mail is key to getting this business. So many of these homeowners don't understand their options to stay in their homes. They generally fall into two categories: those in trouble and don't know how to find help in a loan modification or those who don't even know their home is at risk.
The best approach is to create a contact management campaign that smartly blends education and loan modification how-to messaging. Many times this campaign can be automated by your mortgage CRM or contact management software.
Assessment of Mortgage and Personal Finance
Once they are in your office or on the phone make sure you have an efficient worksheet to quickly calculate the customer's risk and opportunity with a loan modification. Again, this should be a very simple loan and finance worksheet connected or embedded in your lead management system.
Most likely, your first counseling session will be a shock to your client. They are now acutely aware of the risk to their home. Consequently, you are going to need to capture and track this assessment through a potentially extended cycle towards the loan workout process.
Follow-up and Pipeline Management
Because a loan workout is typically longer and more process intensive than a mortgage origination follow-up is critical. These workout programs require a significant amount of documentation and process points to actually deliver a client solution.
More reason than ever to introduce a lead management system into your modified refinance business. Your follow-up and pipeline management process is going to allow you to process and serve a lot more homeowners--making your business much more successful and profitable.
Lead Nurturing of Customers
Of course, not every one will say, "yes" or even qualify for a loan workout. That means you owe it to them to continue informing and educating them on their mortgage options. This is no longer a selling process, but rather an education one.
Loan modifications are certainly challenging for clients and providers, but a good lead management system can make the process much better for both.
Both Maury Klein & Bill Rice are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Maury Klein has sinced written about articles on various topics from Credit Cards, Religion and Malware. Julee is a financial writer on the web and enjoys learning more about solving the world's money problems. You can find more of her writing at . Check out more. Maury Klein's top article generates over 1830000 views. to your Favourites.
Bill Rice has sinced written about articles on various topics from Asset Management, Internet Marketing and Multi Level Marketing. Kaleidico gives top loan modification banks and servicers the edge with software to streamline this complex process. Learn more about. Bill Rice's top article generates over 5400 views. to your Favourites.