Loan Modification FAQ

Many homeowners who are struggling to pay their mortgages find relief through a loan modification. By modifying the terms of a loan agreement to something more favorable for the homeowner, it may be possible to avoid foreclosure and maintain ownership of the home.

The Law Office of Michael E. Ripley represents homeowners in San Diego and surrounding areas. If you wish to find out more about loan modifications, please read the information below. Otherwise, contact a lawyer from our firm to learn about your legal options.

Q: What are my options?

A: Although a loan modification is one possibility, it is not the only one. You may also consider a short sale. You may also consider a deed in lieu of foreclosure. Bankruptcy is another option. Foreclosure avoidance is another option. At the Law Office of Michael Ripley, we consider all of the options for a perspective client, before giving advice as to what the best option for them will be.

Q: What is a loan modification?

A: A loan modification involves changing the terms of a mortgage loan between a homeowner and a lender. One or more terms of the loan may be changed to something that is more financially sustainable to the homeowner. This may include reducing the interest rate, reducing payments, reducing the principal, changing a variable rate to a fixed rate loan, extending the term of the loan or changing other details of the mortgage.

Q: What is the main benefit of a loan modification?

A: Many homeowners seek a loan modification to adjust their mortgages to something that is more financially sustainable. This often allows the homeowner to avoid foreclosure. Lenders can also benefit from a loan modification. It can allow them to reduce their financial losses that may result through foreclosure.

Q: How drastically will a loan modification change the terms of my loan?

A: During your initial consultation at our law office, we will discuss the changes you can expect to see through a loan modification. In general, the government establishes that a house payment cannot exceed 31 percent of an individual's gross income. When a house payment is 40 percent or higher, that individual can expect to see his or her mortgage payments reduced through a loan modification.

Dollar-wise, the amount of savings achieved through a loan modification will vary depending on how drastically the loan is modified.

Q: Do all banks offer loan modifications?

A: All banks are supposed to offer loan modifications. However, as with most businesses, some banks are easier to work with than others. Our law firm has successfully achieved loan modifications with a wide variety of lenders.

Q: Can individuals with bad credit still get a loan modification?

A: It doesn't matter whether an individual has good or bad credit. A credit score is not a determining factor for loan modification eligibility.

Q: Can I still get a loan modification if I have no home equity, or if I'm upside down on my mortgage?

A: In general, individuals who are seeking a loan modification wish to remain living in their houses, even when they owe more on their mortgage than the home is currently worth.

Q: How is the government involved in loan modification?

A: The United States government offers several programs under Obama's Making Home Affordable program. Included are the following:

  • Home Affordable Foreclosure Alternatives Program (HAFA)
  • Home Affordable Modification Program (HAMP)
  • Home Affordable Refinance Program (HARP)
  • Second Lien Modification Program (2MP)

Q: How long does a loan modification take?

A: The answer varies from person to person, but in general, a loan modification can be completed within two to three months.

Q: How much will my new payments be?

A: Since each bank has different guidelines, the answer can vary drastically. However, the goal of a loan modification is to make it easier to afford monthly payments. This is done by lowering the interest rate, reducing the principal, reducing monthly payments or extending the length of the loan.

Q: I have a HELOC, which I did not pay on for years.  The lender is now looking for payment.  What should I do?

A: In the last 9-12 months, the increases in home values have caused properties that were previously "underwater" to now have value.  The lenders for second mortgages, or HELOCs, are therefore seeking payment, although they previously had made no contact with the borrower for years.  In such a situation, our office has been successful in negotiating settlements, for much less than was owed.

San Diego County Loan Modification Attorney

To schedule a free consultation to learn more about loan modifications, please contact the Law Office of Michael E. Ripley online or call 858-792-5800. We serve clients living in the North County and East County areas of San Diego, California.

The Law Office of Michael E. Ripley focuses on loan modifications and serves clients throughout Southern California, including the East County and North County areas in San Diego, California, which includes: the cities of San Diego, Del Mar, La Jolla, Carmel Valley, Chula Vista, El Cajon, Carlsbad, Oceanside and San Diego County.