In today’s housing market it can be very difficult to tell fact from fiction when it comes to understanding the market’s rules and regulations. For homeowners, misinformation can be the difference between qualifying for a home loan and being denied. Knowledge is foreclosure prevention. So let’s correct some common mortgage misconceptions.
Myth One: You have to be in default on your mortgage to meet the requirements for help
• This is 100% NOT true. Purposefully falling behind on your mortgage payments can flop on you for two reasons. First off, if you fail to pay 60 days past due, your bank is forced to run your modification through a net present value test. Meaning your lender would lose less by foreclosing than by modifying your loan, not qualifying for a modification. Secondly, if you don’t qualify for your modification, you may have put some serious setbacks in your credit score.
Myth Two: If you are unemployed you do not qualify for a loan modification
• False. The Home Affordable Modification Program (HAMP) guidelines states, “If the borrower receives public assistance or collects unemployment: Acceptable documentation includes letters, exhibits or a benefits statement from the provider that states the amount, frequency, and duration of the benefit. The servicer must be determining that the income will continue for at least nine months.” In addition, if you are getting unemployment paybacks, the bank can work them into your case when determining your ability to make a modified payment.
Myth Three: Mortgage companies can guarantee getting your principal balance reduced
• While that would be great, it is highly unlikely. Companies all over the US are boasting promises of principal write-downs to get consumers to sign up. Unfortunately, reality is that very few loan modifications involve principal reductions. Lenders are not paid by the government for write-downs. There are a lot of scammers that may “guarantee” to get your loan balance written down, however this is NOT true. If every company could guarantee, this practice would crush the lending industry.
When it comes down to it the more you know, the better you can protect yourself and your home. If you or someone you know may be facing foreclosure, please contact us today. The sooner you address the problem, the faster you will see results.