Arizona loan modification has helped many homeowners stay in their homes and avoid foreclosure. Loan modification is one of the most popular foreclosure defense options. With a modification, your lender modifies the terms of your current loan by extending your loan term, lowering your interest rate, sometimes reducing your principal or adding the default amount to the back end of your loan. Modification only works as an option for those borrowers who have sufficient income to make their new mortgage payment. Modifications are complex, and you should consult with a real estate foreclosure defense attorney to help you with the negotiations.
Obama Administration –Hardest Hit States Fund
The Obama Administration has established a hardest hit states fund for Arizona, California, Florida, Michigan and Nevada in the amount of $1.5 billion dollars to help struggling homeowners avoid foreclosure. A second round of funds has been established totalling $600 million for states with high unemployment including North Carolina, Ohio, Oregon, Rhode Island, and South Carolina. Arizona is providing assistance through permanent modification programs and principal reductions. The state will also help homeowners with second liens that are prohibiting them from obtaining a modification. Unemployed homeowners may seek assistance to help them pay their monthly mortgage payments or remove second mortgages so they can obtain a modification. The state is encouraging lenders to participate in mortgage modification programs including the governments Home Affordable Modification Program (HAMP).
How the Modification Process Works
You don’t need to be in default on your mortgage to obtain a modification. Even if you think you are about to default because you cannot afford your current mortgage payment, you should contact your lender and request a modification. Each lender has different modification programs and eligibility requirements. The process typically involves the following:
- Completing an application
- Submitting a financial hardship letter with documentation supporting your financial hardship. Your lender will probably require paycheck stubs, 1099’s or W-2’s, income tax returns, bank statements and a financial statement. They want to make sure your current debt to income ratio does not exceed 31% of your gross monthly income.
- Submitting an authorization letter allowing your attorney or other authorized representative to negotiate with your lender on your behalf.
- Following up with your lender every 3-5 days to make sure they received your application and supporting documents.
- Your lender will assign a negotiator. The negotiator will contact you to let you know if your application has been approved. If you are denied, you may be eligible for a short sale or deed in iieu of foreclosure.
The process could take at least 3 months so be patient.
Obtain Attorney Assistance
It is recommended that you obtain the assistance of an attorney to help you with your modification. A foreclosure defense attorney is experienced with negotiating mortgage modifications with lenders. Your lender will take your application more seriously if you are represented by an attorney.
