Which of the following best describes a loan modification?
For many homeowners, their home is their biggest asset. To protect it, homeowners struggling to make mortgage payments should know their rights and act fast to work with their mortgage servicers to find solutions. Show
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ForeclosureForeclosure Prevention OptionsWhen a homeowner cannot keep up with mortgage payments, the lender may foreclose on the home. Since foreclosures can have devastating consequences for families, it is important that homeowners struggling to make their mortgage payments work with their servicer to find a solution. Foreclosure can be a fast moving process, so homeowners with concerns about their mortgages should promptly contact their servicer to discuss what options are available to them. The options available to you may depend on a number of factors, including but not limited to your delinquency status and ability to repay any missed mortgage payments, whether your loan is federally insured, and the identity of your lender. Some home-retention options to discuss with your servicer may include:
Homeowners should also be aware that in light of the COVID-19 pandemic, mortgage servicers may offer additional relief, such as a longer-term forbearances or specific COVID-19 deferrals. Read more about these protections here. Homeowners who are so behind on payments that they cannot keep their home and must move out should discuss foreclosure alternatives with their servicer, such as:
Resources and Assistance to Avoid ForeclosureSeek out help to think through foreclosure alternatives, such as by contacting a HUD-approved housing counseling agency. A housing counselor can assess your situation and help you prepare for discussions with your mortgage servicer. To find a HUD-approved housing counseling agency near you, access HUD's database for Foreclosure Avoidance Counseling or call 888-995-HOPETM (4673). The California Housing Finance Agency (CalHFA) sponsors special programs for homeowners facing foreclosure that may help you retain your home or provide funds to relocate to new housing. Visit CalHFA’s Hardship Assistance Page to view options available to you. Homeowners who have fallen behind on mortgage payments due to COVID-19-related financial hardship may be eligible for relief through CalHFA’s California Mortgage Relief Program. This program will pay a total of $1 billion to cover missed mortgage payments during the COVID-19 pandemic. This is a one-time grant that eligible homeowners will not have to repay. To find out if you are eligible and to apply, visit the California Mortgage Relief Program web page. For more information about mortgage relief and foreclosure alternatives, go to the Housing Is Key web page. Homeowner Rights in the Foreclosure ProcessCalifornia law provides you important rights during the foreclosure process. For example, a servicer cannot file a notice of default (which starts the foreclosure process) until thirty days after making a diligent effort to contact you to discuss foreclosure alternatives. (Cal. Civ. Code, § 2923.55.) In addition, if you request a loan modification or other foreclosure prevention alternative, your servicer generally must provide you a guaranteed Single Point of Contact (SPOC) to communicate with you about deadlines, coordinate receipt of required documents, access your current and accurate loan information, and consider you for all foreclosure prevention alternatives. (Cal. Civ. Code, § 2923.7). Additional protections are also available. Learn more about your rights under the Homeowner Bill of Rights here. Loan Modification & Foreclosure ScamsWhat They Are
Tips to Avoid Scams
Reporting Consultant FraudIf you paid a company or mortgage consultant to stop foreclosure or help negotiate with your lender, but they did not do what they promised or you felt you were mislead or defrauded, you may file a complaint with the following agencies:
You may also wish to consider filing a small claims court action. In small claims court, you represent yourself, and disputes of up to $10,000 are resolved quickly and inexpensively by a judge. Visit the California Courts Self-Help Center for further information. Frequently Asked QuestionsI am behind on my mortgage payments or think I may be soon. What should I do?If you are having trouble paying your mortgage or have received a foreclosure notice, contact your lender or loan servicer immediately. You may be able to negotiate a new repayment schedule. Also, check out Resources and Assistance to Avoid Foreclosure. I need immediate legal assistance. Who can help me?You should consult with a private attorney. Visit the State Bar website for assistance in locating an attorney. If you can’t afford a private lawyer, you may be eligible for free or low-cost legal services. To find a legal aid organization near you visit LawHelpCA.org. Members of the Armed Forces and their families can also get help from their local JAG legal assistance office. You can locate your nearest JAG legal assistance office by going to the U.S. Armed Forces Legal Services Locator. Why am I getting collection or foreclosure notices about a second mortgage I haven’t heard about in years?In the years leading up to the 2008 financial crisis, some lenders offered a “80-20” mortgage package. This “80-20” arrangement consisted of two separate mortgages: a first-lien mortgage, which financed around 80% of the principal balance owed, and a second-lien mortgage, which financed the remaining 20% and functioned as the down payment. However, many homeowners did not realize that they took out two different mortgages. Even if they did, many homeowners who later refinanced or got a loan modification for one of their mortgages incorrectly believed that those adjustments carried over to the second mortgage. Many homeowners who went through bankruptcy similarly may have thought that the proceedings discharged all of their mortgage obligations. Some lenders of the second mortgages stopped sending statements or otherwise communicating with homeowners, sometimes for years or until the present day, which allowed this misunderstanding to persist. Some homeowners are now discovering that their second mortgages still exist. With home values rising, some lenders (or the companies that lenders sold their rights to) are starting to collect or foreclose on these “zombie” second mortgages. For some homeowners, a foreclosure notice might be the first communication they get about their second mortgage in many years. Homeowners facing foreclosure on their second mortgages after years of silence from lenders should seek legal assistance. As in any proceeding challenging foreclosure, a homeowner may have defenses available, such as material noncompliance with California’s Homeowner Bill of Rights pre-foreclosure requirements. Depending on the factual circumstances, a homeowner facing foreclosure on a zombie second mortgage may have additional claims to fight foreclosure or reduce their financial liability. For example, lenders who charged off loans and sent borrowers a “Suspension of Statements & Notice of Charge Off” may not be permitted to collect interest for the period of the charge-off, and lenders who failed to communicate with homeowners for years may not be in compliance with disclosure requirements. What is a reverse mortgage?Reverse mortgages allow older homeowners (years 62 and up) to take out a loan against the equity that they have built up in their homes. With a reverse mortgage, instead of making monthly payments to a lender, homeowners instead receive proceeds from their reverse mortgage loan through cash payments or a line of credit. The full loan balance of a reverse mortgage typically becomes due when the homeowner dies or moves out of the home. The only federally insured reverse mortgage is a Home Equity Conversion Mortgage (HECM), which is available through lenders approved by the Federal Housing Administration (FHA). Those considering a reverse mortgage should speak with a HUD-certified housing counselor, as a reverse mortgage may not be right for everyone. Since taking out a reverse mortgage ultimately reduces (as opposed to increases) a homeowner’s equity in their home, it carries risk. Plus, a homeowner with a reverse mortgage still has ongoing financial obligations, and can face foreclosure should they fall behind on tax, insurance, or HOA payments. For more information, and for a list of HECM counselors, visit this page. Those who are facing foreclosure on a reverse mortgage should consult a lawyer. In addition, spouses of reverse mortgage borrowers who are not listed on a mortgage and face a lender’s demand to repay should seek legal help. Back To Top Is Your Foreclosure Consultant Registered?What is considered a loan modification?What Is A Loan Modification? A loan modification is a change to the original terms of your mortgage loan. Unlike a refinance, a loan modification doesn't pay off your current mortgage and replace it with a new one. Instead, it directly changes the conditions of your loan.
What is the purpose of a loan modification?The modification is a type of loss mitigation. The modification can reduce your monthly payment to an amount you can afford. Modifications may involve extending the number of years you have to repay the loan, reducing your interest rate, and/or forbearing or reducing your principal balance.
Does a loan modification change your interest rate?Loan modifications are a long-term mortgage relief option for borrowers experiencing financial hardship, such as loss of income due to illness. A modification typically changes the loan's rate or term (or both) to make monthly payments more affordable.
What is modification process?Process Modification means a change related to the Exploitation of a Licensed Immunotherapeutic that is intended to enhance JBI's ability to effectively Exploit the Licensed Immunotherapeutic but that does not constitute either a Base Strain Modification or an Antigen Change.
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