Can You Get Into Loan Modification If Facing Foreclosure?

When foreclosure is rapidly approaching, you have probably gone down the standard road of attempting to refinance. The problem with being able to refinance is that once your mortgage is in default, your bad credit from not being able to make your payments will most likely keep you from qualifying. Now that there is loan modification as an option, there is help available for people facing foreclosure. The reality is that a loan mod is easier to get if you are in foreclosure.

One of the instant benefits of loan modification is that once it has begun, foreclosure proceedings are stopped. The remainder of the process will include an income verification process because the modified loan amount should be about 31% of your income. It will also include writing an explanation letter. You will need to convince a lender that even though you were in too deep with the original mortgage, you have worked your way out and are able to maintain the modified mortgage payment as agreed without falling behind again.

The loan modification will not reduce the balance due on your mortgage. Past due payments will be absorbed into the modified loan amount, although the late fees and penalties will be removed. As soon as the modification process has been completed, you mortgage will return to a current status on your credit report, and that will instantly improve your credit rating.

The new option of a modification loan may be one of the only times that facing foreclosure will be an advantage. Being at least three months behind in your mortgage is one of the prerequisites for a loan mod. It is not required that you are already delinquent in order to apply, but it is easier when you are already behind in payments.

Now that it is available, take advantage of what may be the only time that facing foreclosure will work in your favor, so don’t let it pass you by.