Maryland homeowners facing foreclosure could take advantage of a loan modification program. The initial conception of these programs was the result of the national housing crisis. Through the laws passed, consumers are protected against predatory lending practices. The programs are designed to ensure affordability for all consumers hoping to buy a home.
How Does Loan Modification Work?
Essentially, a loan modification is initiated after an attorney identifies terms that make the loan unaffordable. With new laws, all lenders are required to evaluate the borrower’s income-to-debt ratio to determine affordability. However, this wasn’t always the case and millions of homeowners are now facing foreclosure.
To modify the mortgage loan, the borrower meets with their lender and attorney. The terms are renegotiated to reduce the payments. Typically, the value is decreased to thirty-one percent of the borrower’s monthly earnings. This reduces the probability of foreclosure and allows the consumer to keep their home.
How to Qualify for Loan Modification
Borrowers who wish to qualify for a loan modification under predatory lending laws must meet certain qualifications. First the starting date for the mortgage must be before January 1, 2009. The total loan value cannot exceed $729,750 for a single-family property. The property must be in foreclosure or delinquent at a severe level where foreclosure is probable.
Providing Proof of Income
The consumer must provide evidence of their income. This evidence should show that the consumer has the ability to afford the loan if it is modified. They should also provide balances of their household expenses. This offers documentation to support their claim that they could afford the loan with their current monthly obligations. The court may require tax refunds, pay-stubs, and evidence of additional income sources. Child support and alimony payments are included as income sources.
Consumers who are facing financial difficulties need to consider a loan modification. This process helps them to reduce their monthly mortgage payments to a more affordable rate. It could help the consumer to keep their home and avoid a foreclosure altogether. It will also reduce the negative impact on their credit. To learn more about loan modification and predatory lending laws, visit Law-margulies.com today.