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Posts Tagged ‘stop foreclosure letter’

Many Americans are saying help stop foreclosure on my home now!
They believe that a loan modification will prevent their property from going into foreclosure.
The truth is that many homeowners who apply for loan modification are eventually rejected, leaving them closer to foreclosure than ever.

Here are some reasons why applying for home loan modification could lead you closer to foreclosure.

When you first apply for loan modification, your lender will request a packet of financial information from you including a stop foreclosure letter of hardship.
Based on the information in your financial documents, your mortgage company may decide to grant you a temporary loan modification.

During this trial period, you will have “lower payments.”
Although you may be required to pay less for these few months, you are not saving any money in the long run, just extending the length of the loan.

The difference between the modified payments and the regular payments accrues with interest.
So you will actually end up owing more than if you had made the original payments.
In addition, your lender will report to the credit agencies that you are behind on your payments.
Even if you have been granted a temporary loan modification, this will adversely affect your credit score.

A loan modification also requires an escrow account for taxes and insurance.
So you will have to pay a portion of these costs each month in addition to the mortgage payment.
However, the lender will not release the escrow until the following year, so you will have to pay taxes and insurance out of pocket.
Essentially, you end up paying for these expenses twice in one year.

Remember that loan modification is based on the financial documents that you submit to your lender.
Your lender will most likely request the same information from you again and again.
Any missing piece of information will result in the denial of your loan modification.
This is why you must call your lender regularly to check the status of your application.
Otherwise you will be denied a loan modification, and you will lose your house to foreclosure.