A loan modification modifies the terms of an existing loan. This is not refinancing. The goal is to make payments more affordable or to allow a borrower who has fallen behind on his or her mortgage to catch-up. If you are in imminent danger of losing your home to foreclosure, it is better to start the process as soon as possible. The terms commonly modified are the interest rate and sometimes the length of the loan. Debt forgiveness is rarely given to adjust a mortgage.
Make sure to use a trusted source for your loan modification and that they are authorized to modify your loan. If they cannot tell you if you would qualify or not prior to submitting your paperwork they probably are not qualified to work on your modification. They should be able to explain your debt-to-income ratio and what that means for the likelihood of modification. If you do not make enough money to pay your mortgage, speak with an attorney to go over all of your options.
Be Aware of Loan Modification Scams in NJ
The State of NJ has a webpage related to Warning Regarding Mortgage Loan Modification Activity .
In New Jersey an entity needs to be registered as a Debt Adjuster under the NJ Debt adjuster act or an exempt entity.
- An attorney-at-law of this State who is not principally engaged as a debt adjuster;
- A person who is a regular, full-time employee of a debtor, and who acts as an adjuster of his employer’s debts;
- A person acting pursuant to any order or judgment of court, or pursuant to authority conferred by any law of this State or the United States;
- A person who is a creditor of the debtor, or an agent of one or more creditors of the debtor, and whose services in adjusting the debtor’s debts are rendered without cost to the debtor; or
- A person who, at the request of a debtor, arranges for or makes a loan to the debtor, and who, at the authorization of the debtor, acts as an adjuster of the debtor’s debts in the disbursement of the proceeds of the loan, without compensation for the services rendered in adjusting those debts.
If the person asking to modify your loan does not fall in the above categories, you are most likely being scammed in New Jersey.
Be Aware of Loan Modification Scams in NY
In New York, the Attorney General has a Loan Modification Scam Online Complaint Form.
Since 2009, the New York Attorney general has been investigating Foreclosure Rescue Scams. If you feel that you are not being leveled with, beware.