subject: How to know the difference between a Loan Modification and a Forbearance So You Can Be Sure You Know What You Are Getting From Your Lender [print this page] Author: Anna Cuevas
It is important for you to be aware of the different offers your lender or servicer sends you when you are requesting a loan modification. Do you know the difference between a loan modification and a forbearance?
This information is important because many times the lender wants to push a forbearance on homeowners when what you are requesting is a loan modification. Stand your ground and if you have to request a supervisor to make sure you are not getting a bandaid when what you need is an operation.
Also make sure you are talking to Loss Mitigation and not the Collection department. Remember they are collectors as they remind you on every call - their job is to try to collect as much as possible and guess what? A forbearance does just that, collects as much as possible. Also, the collection department is trained to collect.
You need to be aware of all the terminology so you are not put in an unexpected situation for lack of understanding. Here is the definition of both. Forbearance Agreement - This is an agreement where the borrower agrees to a mortgage workout that pays back the delinquent mortgage payments over a specified time period in addition to the current mortgage payments, it will bring the borrower current on her payments. A forbearance agreement is not a long-term solution when you are delinquent. A forbearance is designed for a borrowers suffering a temporary financial hardship caused by unexpected changes in their life such as loss of income or illness. A forbearance will most likely result in higher payments for several months to pay back all of the past due payments and fees. If you are still suffering a hardship or are in need of a lower mortgage payment then this is not the right option for you. Loan Modification - An agreement made between a mortgage lender and borrower in which the lender agrees to change one or more terms of the original note. This could be done by either changing or lowering the interest rate, extending the term of the loan from 30 to 40 years for example, changing from adjustable to fixed loan, deferring some of the principal balance or delinquent amount to make the payment more affordable or to avoid any upfront payments of the defaulted amounts - this would usually be interest free due and payable either at the end of the term or time stated, at the time of refinance, or if and when you sell the property or principal forgiveness is when you do not have to payback the principal the lender agrees to reduce from the balance you owe, and you would usually receive a 1099-C as income on this option - check with your CPA if this happens for options. Once you know the difference you are aware of what each of these options mean so you can make educated choices for your loan modification needs. As you navigate through this complex process it is important to learn as much as you can so that you know what you are getting every step of the way and you can have more control of your process. For more free loan modification assistance, tips and tools sign up for your free copy of "Dirty Little Loan Modification Secrets, You Must Know" athttp://www.askaloanmodguru.com "I would rather surrender my life in the pursuit of justice, than save it and live under a tyranny of greed" MISSION: To empower people w/knowledge & help them be their very best. My 23+ yrs. of Real Estate mortgage experience which includes vast insider knowledge and expertise enables me to empower people & reduce frustration during negotiations & loan modification process with their bank. INTENTION: To always give my very best to others in the service of God & humanity. I believe it is my duty to stand up for what I think is right.About the Author:
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Proven Record of Achievement: Modified over 120+ loans including Sale Reversals. My expertise can empower others during the housing crisis w/insider tips, process, & knowledge. Extremely Resourceful. Trustworthy. Excels in meeting objectives using independent action, prioritization & leadership. Confident & poised interactions w/individuals at all levels. Self-motivated. Dedicated, Expert Reputation of Going Above & Beyond whats required. High standards. Achieves results in all life issues.
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