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A loan modification refers to restructuring your home loan by adjusting the interest rate, loan duration and other allied aspects until the monthly installments are low enough for you to be able to pay them comfortably. The Obama government is working hard to resolve the mounting mortgage issues that, according to some reports, over 5 million homeowners across the country are struggling to meet payments for. The government has introduced the Making Home Affordable Modification Program with the main agenda to make home loan modifications and refinance. Recent news that surfaced on the dailies was that thousands of borrowers with certain high risk loans received “35B” notices that offered options to prevent foreclosure by applying for loan modifications, with the clause that qualifying homeowners must respond within 30 days. The Section 35B of GL Chapter 244 states that the officer is required to take reasonable steps and make a good faith effort to avoid foreclosure that includes an assessment of the borrower’s ability to make an affordable monthly payment. Previously, the loan modification option was offered only to persons who had defaulted a loan; however, since the crisis has escalated, this option has been extended to everyone who has a mortgage. As per the loan modification statute that was signed into law in August, 2012, creditors holding certain mortgage loans that are facing the risk of foreclosure must notify the borrowers of their rights to pursue a loan modification or opt for other foreclosure alternatives. In Boston, Massachusetts, nearly 10,000 borrowers have been sent the notice and many are seeking guidance from the Homecorps Program for the submission of necessary documents within the required 30-day period. It is expected that many more borrowers will be offered the loan modification opportunity. As per the law, borrowers that meet with certain pre-defined criteria have the right to apply for a loan modification if they submit a complete financial package to the bank within 30 days. Further, once the financial package has been submitted, the entire modification review will happen within 150 days; and if a homeowner is offered a modification, then they have the right to make a reasonable counteroffer within 30 days of receiving it. If the homeowner does not respond within the notice period, then the process for foreclosure might be accelerated further, leading to an earlier closure of the loan. In order to make an informed decision while selecting the modification and to get the best deal, here are a few things you may do: • Respond early to the notice so that you can start preparing your case for the loan modification option. • Get professional help if you are not very knowledgeable about the technical aspects of getting a modification or to get a better deal. • Find out if your lender is a single bank or there are many separate institutions holding a share. If it is a single, there is an opportunity for you to get better terms. • Write a good hardship letter, stating your case clearly and honestly covering the details of your income, number of dependents, your expenses etc. • Be realistic on your appraisal about your financial strength to meet the long term debt obligation and also understand that the lending agency has the ultimate power to give you a good deal. • Keep a record of all communications and document every dealing. In case, you are given an unfair deal or still signed off for foreclosure, you can seek legal help as the last resort. Be patient in your dealings with the lending officials, often they do not have all the answers and simply say ‘no’ to avoid further confrontation. Storefront is a marketplace for short-term retail space. We make it easy for brands to open Brooklyn pop up shop and streamline the short-term lease process for brokers, shopping centers, and space owners.
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