An estimated 2.2 million homeowners holding 4.47% of the nation’s mortgage loans are currently in forbearance, according to data from the Mortgage Bankers Association.
While most lenders and loan servicers have been willing to work with homeowners during the pandemic, the latest announcements show that relief protections are set to end at the end of July 2021.
With relief extensions expiring, it pays to understand the options for making up missed payments once the program is finally brought to a close.
What is loan modification?
Loan modification could be an option depending on your specific financial situation.
A loan modification is a change to the original terms of your mortgage loan.
The program keeps you in the same mortgage but with new terms that should be easier for you to meet during this time of financial challenges, as payments ramp back up.
Unlike a refinance, a loan modification doesn’t pay off your current mortgage and replace it with a new one.
Depending on the specific loan modification process, it is possible to negotiate a lower interest rate or monthly payment, or the lender might be willing to shrink the balance remaining on your loan.
Keep in Mind
There are several issues to keep in mind when it comes to loan modification.
For instance, modification can come with administrative or filing fees. It pays to look closely to understand the full impact of the fees.
Modification programs may impact your credit score. Our housing counselors will take the time to work with you to understand the full implications based on your specific situation.
As borrowers regroup and figure out their options after relief programs end. Remember you are not alone. Teaming with a HUD-certified counselor helps you get the full picture abou tloan modifications and other programs related to your housing.
Tread Carefully
Now more than ever, be sure you’re dealing with a reputable resource when it comes to loan modifications. Mortgage loan modification scams are schemes to take your money – often by making a false promise of saving you from foreclosure.
Common scams involve requiring fees upfront to receive services and asking you to sign over the title to your property. You might also be pressured to sign papers that you do not understand or make payments to someone other than your servicer or lender. Reputable companies never make these requests.
995 HOPE HUD-certified counselors can help you understand what to look for when it comes to scams. If anyone has made any of these requests or claims, you can report that company by submitting a complaint with the CFPB online.
Learn More
There is hope after relief programs end. Understand your options, especially when it comes to loan modification. Learn more: https://995hope.org/homeowners-renters/post-modification-support/
