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Loan Modification

Loan Modification in Texas: Your Options

If you are looking for a Texas loan modification for your Texas property, you will need to speak to your lender about the various programs that they are offering. Typical loan modifications are where the lender modifies your existing mortgage to lower your payment by lowering your interest rate at least 2% and extending your loan term. Some programs also reduce your principal and eliminate late fees and penalties.

Watch Out for Scams

When you are looking for a modification, borrowers should be aware of loan modification companies that are taking consumer’s money and not obtaining loan modifications for them. Avoid any company that asks you for a large upfront fee and does not provide references and a detailed written list of services they will perform for you. If you think you have been a victim of a loan modification scam, contact the State of Texas Attorney General’s office.

Only work with a reputable and trusted mortgage broker, a HUD certified housing counselor, a foreclosure defense attorney or your lender’s loss mitigation department when applying for a loan modification. You only get once opportunity so you don’t want to jeopardize your chances by wasting valuable time using the wrong person to assist you with the modification.

Government’s HAMP Program

For owner occupied primary residences, the government has a modification program that you and your lender can participate in called HAMP. Investment property or vacant property does not qualify. In order to be eligible for the program, you must demonstrate that you have a financial hardship and that you are unable to continue making your mortgage payments and you are about to default or you are already in default. Borrowers can only modify their mortgage once under the program. Other guidelines include the following:

  • Only loans originated on or before January 1, 2009 with a loan balance equal to or less than $729,750 qualify (higher limits for two to four units).
  • First and second lien mortgages qualify.
  • Your mortgage payment including insurance, taxes and any homeowner association dues must be more than 31% of your gross monthly income.
  • You can no longer afford your mortgage payment as a result of a financial hardship.

The lender will require copies of your financial records such as W-2’, 1099’s, last two paycheck stubs, last two year’s tax returns, recent bank statement and list of debts and assets.

Seeking Help

There are HUD certified housing counselors that can help you with your modification program for free. To find a list of HUD counselors in your area, visit the HUD website. Working with a loan modification foreclosure defense attorney is a good idea as well. The attorney can negotiate the modification and review your original loan documents to see if your lender violated any lending laws. If they did, then the attorney can use the information as bargaining power to get you a favorable loan modification. Lenders face fines and penalties for violating lending laws so they would rather work out loan modification for your Texas home than get fined.

You should not ignore your financial situation because you could end losing your Texas home to foreclosure. You may have other options such as reinstatement, forbearance, refinancing, selling your home if you have equity or getting your lender’s approval if you are upside down on the mortgage to sell it as a short sale. The modification attorney can advise you of all your legal rights, remedies and obligations. If you cannot afford an attorney, the HUD housing counselor can help you or you can find information on the Internet that you can read to educate yourself about the Texas loan modification process and your options.

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