FAQ

Frequently Asked Questions

How long does it take to complete a loan modification?

Most banks claim the process takes 30-90 to process in the lenders loss mitigation department. Prior to arrival in the loss mitigation department, typically, information can take up to 3 weeks to “upload” into lender’s database. Additionally, individual items such as:

• completeness and organization of documents provided by the homeowner;
• individual complications (unusual financial hardship, RESPA/TILA violations, builder defects…)
• Quantity of loan modifications the servicer/lender/insurer is presently working on;

Can all affect to the complexity and time require, not to mention, the bank’s desire to finalize a loan modification.

How Do I Qualify?

The requirements for qualifying for a loan modification are typically set by the largest purchaser of mortgages on the secondary market. Being the largest player with the most to gain/lose they set the standard for other smaller servicers and lenders. In recent history Fannie Mae has been the largest purchaser and details their guidelines in the Fannie Mae Single-Family Servicing Guide. The updated servicing guide is updated and available at: https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2008/0831.pdf

The fundamental requirements for qualification are: a willingness to enter into/facilitate a work-out agreement/loan modification; display a financial hardship; and have the financials to support the agreement.

What If I'm Already In Foreclosure?

“In Foreclosure” is a relatively loose (though intimidating) expression. In most cases, homeowners are in the Foreclosure process when a “notice of default” is filed. Frequently more work-out options are available prior to the lender/servicer incurring costs related to a foreclosure. The primary motivation of the bank in entering into a work-out is the intention to save money. The more money the bank spends on the foreclosure process the less beneficial a work-out will be from their perspective. Conversely, the early stages of the foreclosure process typically leave enough time available to achieve a beneficial result.

What If I Have Bad Credit?

“Bad Credit” typically refers to a score. As you go higher up the chain of a bank – to the type of authority that can perform a cost benefit analysis for a loan modification/set the terms for a loan modification we agree with some that say the credit score is not a primary concern. This is because credit “scores” are not as informative as the criteria that make them up. Credit “Scores” are calculated by, what are commonly referred to as, “Credit Scorecards”. Controversially, any data available to the lender/servicer can be included on these “Scorecards” for the purpose of evaluating risk. Due to the time and expense spent on this technology, to name a few, we believe it is illogical and irresponsible on the part of the lender/servicer if they do not evaluate this information.

How long do I have to start a Loan Modification?

We recommend a change in your thought process. If you are aware there is a problem with your mortgage (A First Tier Financial Responsibility) waiting while attending to lower priority items may indicate to the servicer/lender you are less of a candidate for loan modification and leave you few options other than (1) Paying your mortgage (2)Foreclosure (3)Bankruptcy.

Are Lender Loss Mitigation Representatives hard to talk too?

First, you need to find a loss mitigation representative. Typically when you call a servicer you are speaking to someone more along the lines of a debt collector. From the Lender’s point of view, Loan Modification is really the process of stopping or minimizing loss. In the event you call the servicer and feel as though your not receiving information for a work-out but instead “when will you make this account current” you are most likely not speaking to someone from “Loss Mitigation” and may consider contacting the lender who may be more interested in helping. Most loss mitigation representatives are easy to speak with if you know how to do it. They deal with people all day that may not be providing information accurately/correctly/or timely so we recommend finding out what they want and how they want it – And Do It – EXACTLY.

Why do loan officers or loss mitigation specialists get paid so much for there services?

Hopefully you are paying for a previous investment they made in education (time/effort/money); previous work experience (time, effort, money); and the risks/rewards associated with their job.

What is Loan Modification?

A loan modification is a written agreement between the servicer and the homeowner that permanently changes one or more of the original terms of the note in order to help the homeowner bring a defaulted loan current and prevent foreclosure OR a process where the terms of a mortgage are modified outside original terms of the contract agreed to by the lender and borrower. See our video series – Get Modified Episode 1

Do I have to be behind on payments to qualify for a Loan Modification?

While most loan modifications are done for those who are behind on mortgage payments and can show a substantiated reason for why they cannot catch up, you don’t have to be behind to qualify for a mortgage modification.

Can missed payments be included in a Loan Modification?

Past mortgage payments that went unpaid can be included into a loan modification. A willingness to get caught up in your current mortgage can show the lender how serious you are about making any new mortgage terms a top priority.

What constitutes a “Hardship Situation”?

A “Financial Hardship” is fundamentally described as an unexpected increase in expenses or unwilling decrease in income. Many things can cause this. Financial hardship is commonly caused by death of a family member, divorce, injury, illness, or loss of employment.

Can a Loan Modification help me avoid foreclosure?

Absolutely, that is the primary purpose. You should consider a mortgage modification before entering the foreclosure process. As lenders and banks continue to help homeowners avoid this costly situation mortgage modifications have become more and more attractive.

Can late fees be included in a Loan Modification?

According to the HAM Program, No. Late fees on overdue payments cannot be included in a mortgage modification plan. There are other programs that allow for this. The most important point we can make on this is be clear on every detail of your agreement and take nothing for granted.

Will the bank require an interior inspection of my home?

An interior inspection of your home could be necessary as a means to determine whether a loan modification is a viable option. This inspection is meant to determine the value of the home.

What are my options for settling the problems I have with my mortgage?

Understanding the available options is an issue for many people. The Loan Modification industry has changed considerably since the summer of 2008, andmany new options have been added to give homeowners a better chance at keeping their homes. There are many ways to improve a bad mortgage situation, but some are much better than others. You should speak to someone who has a firm knowledge of Loan Modification and who is aware of current market conditions.

What is my biggest priority when it comes to my credit and debt problems?

Prioritizing debt is required of everyone who experiences credit and debt problems. In the large majority of situations your: Food, Current Medical Costs, Mortgage, Utilities, Car Payment, Child Support, and Income Tax should be considered first. Many of our clients told us the most difficult part was not knowing what to do. These same clients report a weight being lifted from their back’s after a 15-minute conversation with a qualified professional. This is due to the fact there are many things a consumer is qualified to do to improve their quality of life.

My Credit Score is much lower than I would like it to be. Is there anything I can do about it?

Yes. In 2004 a survey conducted by the U.S. Public Research Group reported that 79% of people polled had inaccurate information listed in their credit reports. There is also information that may not be listed in your report that can bring down your FICO score, such as a limit on a credit card. Your FICO score is what 90% of the largest banks in the U.S. use to evaluate your Financial Health. You should have someone evaluate your credit report who is well informed on: The Fair Credit Reporting Act, Fair Debt Collections Practices Act, Truth in Lending Act as well as Student Loan, Foreclosure, Bankruptcy and Repossession Laws.

U.S. PIRG, Alison Cassady, and Edmund Mierzwinski, Mistakes do Happen: A Look at Errors in Consumer Credit Reports (June 2004)

Should I try to do these things for myself?

At Falcon Credit Management we encourage individuals to address the hurdles in their lives. The hurdles that relate to your financial well-being can be some of the most gratifying and beneficial to overcome. This is why we will recommend and provide a plan for a client that includes actions that can be taken to improve their financial health.

We also recommend clients consider the risks of attempting to address the issues that have serious consequences. Unfortunately we are frequently contacted by consumers who have previously employed someone not qualified Or attempted to perform the services themselves that every member of Falcon Credit Management has dedicated more than a decade to being able to address. These situations bring added complications, which add to the time and the costs which many times are not available. For this reason we recommend taking advantage of a free consultation with a qualified professional.