I am not delinquent or in foreclosure yet, but I foresee difficulties in the immediate future in making my mortgage payments. What are my options? Could I qualify for a loan modification?
You may qualify for a loan modification if you can demonstrate and document you are at risk of being unable to make your mortgage payments. For example, your interest rate will change (increase), your work hours will be or have been reduced, you or your immediate family have had a medical emergency affecting your finances, your total household income will be less, your business is or has been suffering losses, or you are aware you will lose your job in the near future because of reasons beyond your control. It is likely your servicer will also want to know if you have used all your savings or cash reserves.
If you are unemployed or have no means to make the payments, you likely will not qualify for a loan modification, regardless how significant those changes could or will be. At a minimum, you should have a reliable and verifiable source of income and not have other significant large debts such as credit cards, car payments, and other obligations. However, if you are unemployed, you may qualify for a forbearance plan.
Can I apply for a loan modification once foreclosure has begun?
You can still apply for a loan modification and stop the foreclosure process. In addition to the notice of sale, you should have received another notice called "You are in Danger of Losing your Property if you do not take action immediately." If you want to apply for a loan modification, you must respond to these notices within 30 days to the address provided in the forms and send all the requested information as instructed by the lender/servicer. The lender/servicer must notify you within 45 days after receiving all the required information to determine if you qualify for a modification. If you are denied for a loan modification, the lender/servicer should provide you with an explanation why.
These steps, which the lender/servicer must comply with, are particularly important because five days before the sale date (auction date), the trustee will file an affidavit (if the lender/servicer did not postpone the sale) with the county where your house is located explaining in detail how the lender/servicer complied with the law and the above requirements. You can obtain a copy of the affidavit from the county records office where your house is located. Compare the information in the affidavit with your notes and records.
If your loan is insured or owned by Fannie Mae or Freddie Mac, your participating lender/servicer must first evaluate your application for a loan modification to see if it qualifies for HAMP. To find out whether Fannie Mae or Freddie Mac owns your loan, click here.
How can I find out if I qualify for a loan modification?
If you are applying for a modification under the Home Affordable Modification Program, you can take a “self-test” to determine if you are eligible.
You can also make a self-evaluation by using the HOPE Loan Portal, a website intended to help you submit your application for a loan modification with the assistance of an approved housing counselor.