If you are no longer able to afford your mortgage, a loan modification may be a possible opportunity to maintain ownership of your house. All lenders have a process that may allow a homeowner to restructure their loan in such a way as to reduce monthly payments.
To qualify for a loan modification, the property must be owner occupied. The Home Affordable Modification Program (HAMP) is a qualification tool used by some lenders to determine whether or not this is an option for the homeowner. Each lender has a unique loan modification package that will need to be submitted for review. If approved, the lender will present a new payment schedule to the homeowner for their consideration. If the terms are acceptable to the homeowner, they will begin to make the new payments immediately.
A loan modification request may be prepared and submitted by the homeowner. Alternatively, the homeowner can choose to hire a company to handle this process for them. Companies typically charge between $1500 and $3500 to complete the loan modification process. In some states, such as Colorado, the company cannot charge any upfront fees and is only paid if the homeowner is offered and accepts the terms of a loan modification.