FAQ

What is a loan modification?

A: A loan modification is precisely what it sounds like. It is a charge of the current terms and conditions of your loan to better suit your finances and allow you to keep your home and get current with your payments. These changes can include but may not be limited to altering the interest rate, waiving of late charges, reduction of principal, removal of adjustable rates to be replaced by fixed rates and several others. These changes will be negotiated and made on a case by case basis. Many borrowers find this to be an excellent alternative when traditional refinancing is not available; they are having trouble keeping up with their payments or will not be able to make the foreseen payments as a result of an adjustment in their rate.

What is predatory lending?

A: This term can apply to all aspects of the mortgage industry and refers specifically to the practice in which a creditor misleads a borrower about the terms, fees and other aspects of the loan being sold to that borrower. Federal laws such as the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA), as well as many state laws, require creditors to disclose certain terms to their loans to borrowers. When those terms are not properly disclosed or are inaccurately portrayed these laws provide legal remedy in the source of monetary penalties against such creditors. This kind of action will lead to an approval for modification.

Just one example of predatory lending tactics is the classic bait and switch. This is when a smooth talking loan officer says you will qualify for a great rate but when you sit down at the closing table that great rate suddenly isn’t so great anymore.

Appraisal inflation has also been a common practice of predatory lenders. By stating that a home has a higher value through a faulty appraisal the lender can convince the borrower to take out more money then the home is worth to boost the lender’s commission and monthly income by way of a higher payment. This also creates a hardship for the borrower over time as the amount of their loan is higher then the fair market value of their home making it impossible for the homeowner to qualify for refinancing to get out of high interest or adjustable rate mortgages.

Elder abuse is another common form of predatory lending. Retirees often have a substantial amount of equity in their home and are prime targets for greedy loan originators. The amount of available equity allows the originator to increase the amount of closing costs charged to the borrower as well as the monthly payment; providing for a higher commission for the originator and more monthly income for the loan servicer.

Some forms of predatory lending are so easy to spot that it takes just a few minutes glancing at the paperwork for an experienced mortgage attorney to uncover these violations. Others are more intently obscured and require an in depth knowledge of the homeowner’s rights. This is why it is necessary to have the very best in legal representation assigned to your case. We are usually able to determine whether there was a violation within about 30 minutes and can then advise the borrower whether he or she has a case that will result in a solution.

What is loan forbearance?

A: Forbearance means you are allowed to delay or alter your payments for a short period, with understanding that there will be more changes to your payments to eventually make up the difference and bring your account back to current status with no fundamental changes in the terms of your loan. This leaves you, the borrower, vulnerable to falling prey to the same conditions of your loan that caused you to have difficulty in the first place. A modification will change the terms of your loan and provide you with the peace of mind that your new agreement is tailored to your account financial situation. In addition, the past due amount owed the servicer of the loan is also subject to negotiation and can be substantially mitigated if not entirely abolished.

What is short sale?

A: A short sale occurs when a borrower owes more on a home than its fair market value. In order to avoid foreclosure proceedings and the damage that does to one’s ability to open lines of credit in the future, the borrower will elect to see the home below market value after reaching an agreement with the lender to settle the debt for less than what is owed. In this scenario the borrower loses the home in selling it to the bank.

We are here for you!

Save My home .com and, David Alishaev, Esq are available to any and all homeowners seeking professional advice about the financing of their home. We pride ourselves on procuring the very best in legal representation and professional customer service. As always the satisfaction and security of our clients and their families is our first, second and third priority. Please call us for any additional information or with any questions you may have.