Can I Get A Loan Modification_ California Law Says Yes!
Can I Get A Loan Modification? California Law Says Yes!If you are one of the many homeowners worried about making your mortgage payments or havealready missed a few, you could qualify for a loan modification. California, a state that has seen adrastic increase in foreclosures and boasts neighborhoods of deserted houses has made it a law.Civil code 2923.6 was enacted in California in July of 2008. This law requires lenders to offer thoseborrowers who are facing or in the midst of financial crisis the opportunity to modify their home loansin the hope of decreasing the alarming number of home foreclosures.You do not already have to be in foreclosure to qualify for a loan modification. Actually, early actionwill save you and the bank a significant amount of money. If you feel that you are losing your grip onyour ability to make your monthly payments, contact your lender and request a loan modification. Ifyou purchased your home in California between January 1, 2003 and December 31, 2008 then thelaw says you must be offered the chance to modify your loan.What exactly is a loan modification? Well, unlike a refinance, which is a completely new loan with newterms and conditions that requires extensive pre-approval, a loan modification makes changes to yourexisting loan. The most common modifications are a decrease in the interest rate, a change from avariable rate to a fixed rate, and an extension in the term, stretching payments out over a longerperiod of time so that they are smaller. Some banks will even roll the principal of missed paymentsinto the loan, or add these payments to the end of the loan. Under federal regulations, your loanpayment cannot exceed 31% of your gross monthly income.Californias move on the state level to mandate loan modifications for qualified lenders isrevolutionary. This state has been hit hard by the foreclosure crisis and entire neighborhoods of lovelyhomes sit vacant and crumbling. In an effort to keep people in their homes, or return them to theirhomes, California enacted this law. Since its inception, the number of people being forced from theirhomes has decreased drastically.Loan modifications are a win-win situation. The banks do not rely on tax payer money to bail themout; the modified loans keep the interest payments coming in and homeowners do lose everythingthey had in a home foreclosure, they stay in their homes and have a better chance of surviving thisfinancial crisis. Hopefully other state will follow suit and enact these kinds of laws.real estate burbank