Your Questions About Mortgage Loan Modification

James asks…

Can a Mortgage Loan Servicer require a divorce decrea as well as a Quit Claim Deed to remove a spouse from con?

I’m under review for a loan modification for my home. My wife and I are separated and the loan servicer said we needed a Quit Claim Deed to have her removed from the mortgage contract. Not a problem we told them. About a week later, we’re told we also have to have a Divorce Decree. Now the mortgage payment will be $775, if approved, using both incomes under Hamp. Now, using my income only, after my wife has been removed from the contract, the mortgage payment would than be $575 after using the Quit Claim Deed. Can our Mortgage Servicer require us to get a divorce in order to get the Divorce Decree that they say is a requirement to get the modification?

John answers:

Yes; because the final disposition of the property and the fact you may have to pay her as a result of the transfer could be determined and set by a judge as part of the final decree. Without it, there is nothing certain about who has what. She QC’d it” a judge may rule you owe her 20 grand for the deed. Or he may give the property to her as part of the settlement; which means you’ll be returning it to her.

I’ve required it a dozen time back when I was underwriting.

Sandy asks…

What is the difference between Mortgage Modification and Refinance?

Also, if a wanted to do a Mortgage Modification should I do it directly with the bank I have the mortgage with or should I seek help from a lawyer or those institutions that do mortgage modifications?

John answers:

Modification simply modifies your existing mortgage while a Refinance initiates an entirely new mortgage with new terms. You should always do the easiest thing first which is to consult the lender you have the original loan with and ask about modification. They have a financial interest to work with you, if they choose, but no legal obligation to do so.

Linda asks…

is my credit score a factor when applying for loan modification?

I’ve never ever missed a mortgage payment, but I don’t think I’ll be able to pay in a few months time so I’m thinking of doing loan modification. I’ve had credit card problems in the past though, so my credit score pretty much sucks. Is this going to affect my application for a loan modification?


John answers:

Of course it will Mortgage modification is the same as refinancing. All the requirements of credit worthiness are considered

Donald asks…

When should I request a loan modification?

I own a condo that I haven’t been living in recently because I moved away for grad school. Now I have graduated and am moving back in ASAP. I desperately need a loan mod or I will lose the property. I haven’t paid the mortgage this month and don’t have resources to do so. If I move in next weekend, and start the loan modification once I am 30 days late on the mortgage, will this help my cause?

John answers:

All banks are different. Most banks require you be late on a payment to be eligable for a loan mod And not just 30 days but 60 days late. Once you call your bank they will explain the entire process to you. If this is the 1st payment you’re missing, you’re not even considered late on your mortgage. You have 3 months till you get your NOD(notice of default) 4-5 months after that you’ll get the dreaded NOT(notice of trustees sale). If you get your NOT, you have 3 weeks till the bank forecloses on your condo.

Money tight? This is your opportunity to pick yourself up. You can wait till your 6th or 7th month of payment free living berfore applying for a loan mod.

Whatever you do, do your Own loan mod. Banks are much more cooperative with the owners than the failed lawyers and realtors that jumped on the short sale wagon.

Mandy asks…

Is charging for loan modification legal before the modification is complete?

I am currently paying for a legal representative to help me with a loan modification. Should I be paying now or not until the modification is done? I heard from several sources that this is illegal. If so, where can I find documentation of that law? Please advise. Thanks.

John answers:

I have successfully completed almost 400 Loan Modifications for Clients in the past 4 years with 2 law firms (California & Texas). Most states prohibit the acceptance of an advanced fee for the purposes of effecting a loan modification on a residential property, and the acceptance of any funds by any entity, including a licensed law firm, until each and every aspect of the contrcat with the homeowners is complted, can be sufficient to have an Attorney disbarred in many states. In many states it is illegal to accept any advancved fee for a loan modification since around October of 2009.

So it really depends on what state you reside in,and what state the property is located. The laws will be indigenous to the state in which the property is located if it is lawful to charge you an advanced fee

All fees at the law frims were only paid when the Client signed the actual modification contract. I do not believe anyone needs to hire an Attorney to achieve a modification. They will try to make you believe you need special knowledge to receive a modification, and they have it. It is a big lie! It is not hard if you know exactly what to do. After 400 modifications I actually wrote a comprehensive book, The Complete Loan Modification System available at www.LoanMod, that is 215 pages and explains step by step exactly how a homeowner can achieve a loan modification on a First Mortgage, and settle a Second Mortage/HELOC for as little as 10% of the amount owed, on their own without sending thousands of dollars half way across the country.


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