The care of your loan is much more complicated than it appears. To some, this may sound funny because many of us do not think of a mortgage as simple on any level. Usually when making your monthly payments you only deal with the servicer. They are responsible for taking payments, crediting the accounts, and taking the steps for foreclosure if the loan is in default. There is another party involved party involved in your loan you may not be aware of.
This other party is generally invisible to loan holders because they do not communicate with you. This silent party has the biggest stake in what happens in your mortgage and that is the investor. They own the mortgage and earn profit on the interest paid. Many homeowners don’t realize there is another party involved with the mortgage until there is a financial hardship and payments have not been made when the servicer relays information that the investor will not allow a modification.
So why would an investor deny an attempt to make a new payment agreement through modification?
The modification of a loan requires the permanent change of one or more of the loan terms. Some of those changes may come in the form of lowered interest rates, longer loan terms, principal reduced, and lowered monthly payments. All of these things can mean less money for the investor.
Usually when an investor denies the request for modification it is because they believe they can make more money if they foreclose on the loan instead of modify. Making money is the reason the investor owns the loan and it is strictly business so they are going to look for the option to make more money.
If you have a Fannie Mae or Freddie Mac loan or your lender is another GSE they are required to let the servicer consider you for the government’s Home Affordable Modification Program more popularly referred to as HAMP. Other big banks that received government funds in the big bailout are also required to consider homeowners for HAMP.
Private investors, however, can play by a different set of rules and it can be more difficult to get a modification from them. They are not bound to the government requirements so when and if they give a modification it can be less helpful.
What can you do if your mortgage investor has denied your loan modification?
Get the help of an experienced attorney that deals in loan modifications. Usually when you speak with the servicer you may be speaking with someone that does not know all the programs available out there or your rights as a home owner. There is so much information to know about the modification process and the best thing you can do is to have an experienced loan modification attorney on your side who knows all the information and can help you get the best results.
Being denied a modification does not have to be the end of your attempt to stay in your home. You can reapply after rejection. For more information on how legal representation can help with your modification please contact the team at Advantage Legal Group.
Check out this week’s video blog: