Frequently Asked Questions
Feel free to contact HOMEstart at 858.581.1800 anytime with other questions.
- What is a loan modification?
- How do I get started?
- Would lenders rather foreclose or modify my loan?
- How does the foreclosure process work?
- Why choose HOMEstart over a law firm?
- What questions should I ask my loan modification company?
A Loan Modification is a permanent change in one or more of the terms of your loan. The purpose of a loan modification is to allow the borrower to meet the new loan modification terms, allowing them to prevent foreclosure. A loan modification is not a refinance; it is the restructuring of the loan terms. In other words, a loan modification is a contractual agreement between the Lender and the Borrower to provide long term relief from unaffordable loan terms. Loan modifications can lower your interest rate(s), monthly mortgage payment(s) and the principle balance (loan amount). Remember the cost of foreclosure to the Lender is higher than new loan modification terms; therefore, lenders are open to loan modifications to prevent foreclosure. A loan modification will cost less than a refinance and it's available to more people, even those that owe more than the value of their home, behind on mortgage payments and/or have poor credit, which become roadblocks for a refinance.
Our process begins by filling out a simple application and submitting it to HOMEstart Intake Processing. Once the application arrives, our processing team will review it and once pre-qualified, HOMEstart will send you a full loan modification packet that includes all the documents we need to complete the process. HOMEstart's Customer Service department will keep you up to date on your case on a weekly basis, while also being available to you 7 days a week. Come visit our main office in San Diego or feel free to call us anytime and we will be happy to assist you while completing your loan modification packet. Once we have received all the documentation, HOMEstart will submit it to your Lender and begin the Negotiation process. At that time you can sit back and wait for HOMEstart to contact you with your new payment plan and loan terms.
Would lenders rather foreclose or modify my loan?
Lenders prefer to modify your loan(s) because foreclosure is a costly and time-consuming process. It is expensive for lenders to put your house on the market and re-sell your home. In addition, the declining home prices and competitive real estate market make it difficult to re-sell your home after foreclosure. Lenders want to create any solution where they can receive some payment. HOMEstart loan modification specialists will negotiate with your Lender new loan terms which will allow you to make affordable and consistent payments, resulting in an agreement to lower mortgage payments.
How does the foreclosure process work?
If you are looking for loan modification services, then you are probably looking to save your home by preventing foreclosure. The closer a home owner gets to foreclosure, the more difficult it becomes to get a mortgage loan modification. Knowing the foreclosure process and timeline will help you evaluate your situation and make the best solution for your current or approaching financial hardship.
Collections Stage. This period, ranging from 30-90 days, begins when you miss your first mortgage payment. Generally your bank will try to contact you before taking any severe action. After 2 to 4 weeks from the first missed mortgage payment, your bank will begin to assess late fees. If the second mortgage payment is missed, your lender will send you a breach of contract letter, which formally informs the borrower in writing that they have violated the mortgage loan terms. In addition, after the second delinquent payment, the borrower will be given 30 days to pay the balance or come to a resolution before receiving a Notice of Default.
Notice of Default. At this point, also known as pre-foreclosure, the borrower has missed their third mortgage payment. Pre-foreclosure starts when your lender files a Notice of Default (NOD) at the county office governing your property. Unfortunately for the home owner, technically speaking the foreclosure process begins at this time; only a short 2 months after your first delinquent payment. It takes less than 2 weeks to receive your formal Notice of Default. In California, a 90 day period, known as the Reinstatement Period, is initiated as the time frame the borrower has to resolve the owed balance before a Notice of Sale.
Midpoint. At this time, typically 60 days before the Auction date of the home or property, the borrower's options for initiating a loan modification get very difficult. Contract terms vary from lender to lender, but the trend is the longer you put off making payments, the less likely your lender will allow you to create an agreement to modify your mortgage loan terms. However, if the borrower does manage to get caught up in payments, the NOD would then be withdrawn.
Notice of Sale. At this point, also known as Pre-Trustee Sale, the owner's property will have a Notice of Trustee Sale (NOS) publicly posted. The notice remains posted for 3 weeks (21 days) and will contain the time, date and location of the auction. Fortunately, the borrower is able to reinstate the loan upon payment of the balance owed from delinquent payments 5 days before the auction date.
Trustee Sale. At this time, also known as the Auction date, your home is officially auctioned off to the public. The borrower is given 10 days to remove all property and leave the premises from which thereafter a sheriff will get involved to enforce eviction.
If you are struggling to afford your mortgage payments, but have a tremendous interest in saving your home from foreclosure, the borrower's only option is to try a loan modification. Do not hesitate to contact HOMEstart to ask any questions regarding your financial hardship. We are here to help; start new, not over.
Why choose HOMEstart over a law firm?
There are many reasons to choose loan modification specialists over a law firm. Below are the 5 major reasons both residential and commercial property owners looking for loan modification help should choose HOMEstart:
Cost. Considering the nature of the service needed, it is a safe assumption that the cost of loan modification services is the primary concern for the consumer. Law firms generally do not offer a fixed rate to modify your home loan and costs will range from 5 to 8 thousand dollars. The price is inflated because many times a lawyer will be involved in the consultation and negotiation process. Most private practice lawyers charge very high hourly rates so loan modification lawyer's costs to process your mortgage modification will reflect their lawyer counterparts, making law firms nearly 2 to 3 times more expensive than loan modification specialists.
Time. As the saying goes, "Time is money" so the next major concern for the consumer is how long the loan modification process will take. Considering the loan modification is a seven step process, one can imagine your lawyer is not specialized in each of the seven unique steps. In addition, lawyers will normally not spend the additional time needed to expedite your loan modification. This is because that they want to maximize what profit they make per hour on your loan modification file. Since your lawyer is busy managing so many steps of the process, the loan modification generally takes longer as well. Most lawyers are actually firm partners or owners and so their responsibilities to the firm far exceed their responsibility to your particular loan modification file. Loan modification specialists can modify your home loan in as quickly as one month.
Guarantee. Normally when a consumer purchases a service, they are concerned about the guarantee. Most law firms do not offer competitive refunds or guarantee for the loan modification service because they feel the value of their time exceeds that of a loan modification consultant or negotiator. There will be higher upfront fees, also known as a retainer, and most law firms are not bound by the Department of Real Estate restrictions on Advanced Fees. Loan modification specialists choose to have experienced consultants and negotiators vs. lawyers consulting and negotiating loan modifications. However, most accredited and licensed loan modification companies use lawyers for the contract review, also known as the approval phase, so the consumer does not lose any legal expertise during their loan modification process.
Customer Service. Your lawyer is not trained in customer service, but rather law(s) and contracts. Lawyers understand you need them as a last resort measure and therefore do not uphold a high standard of customer service. A lawyer is not as willing to spend however long it takes to get you not only comfortable with beginning a loan modification, but also provide any amount of assistance necessary to have all your questions answered. Developing all the relationships necessary with major lenders takes a lot of resources and usually any firm with the experience to provide dependable loan modification services (for the most part) will often also be high-volume firms; instead of having a name, you have a customer number.
Reputation. The consumer also considers the reputation of the business for which they seek specialized services. Unfortunately there is no AAA or Fed-Ex in the mortgage loan modification industry. Some high volume law firms might pay for local TV commercials, but normally anyone looking for loan modification help has no prior knowledge of what businesses are the most reputable loan modification companies. For this reason, the consumer can trust the Better Business Bureau (BBB). It is not unexpected to see that there is not a single law firm in California that has an "A" (let alone an A+) BBB rating. This is partly due to loan modification law firms having higher costs and inferior customer service, which increases complaints. Due to their high volume, there is a higher frequency of unresolved loan modification files which leads to yet again more complaints and delays in other loan modifications filed thereafter.
With all these reasons to consider, it becomes a relatively easy decision to choose loan modification specialists vs. a law firm. However, lawyers become vital when the borrower is very close to the auction date, a time which does not occur until there are about 6 months worth of delinquent payments. Hiring a lawyer should truly be your last resort and we can refer one near you if necessary. HOMEstart provides the mortgage loan modification service at a lower cost, within less time, under a better guarantee, with far superior customer service and an A+ BBB trusted reputation. We are here to help stop foreclosure; start new, not over.
What questions should I ask my loan modification company?
We urge all consumers to continue researching and learning about the loan modification process, whether from our website or others. You should be absolutely comfortable with not only the process, but also with the company or law firm you choose.
Whomever you chooose to have process your loan modification, be sure to ask the following questions:
- Are you Accredited by the Better Business Bureau (BBB)?
- If so, what is your BBB rating or grade?
- Do you have a license from the Department of Real Estate?
- If so, what is the license number and is it current for this State?
- If you are unsuccessful, what is the absolute most I have to "risk"?
- Do you have underwriters process my application before submitting to my Lender?
- Do you have lawyers review my contract (offer from Lender)?
- At what frequency will I be updated on my file?
- Does your fee stay fixed no matter what?
- Will I be told your foreseeable success rate before I proceed?
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