Frequently Asked Questions
It is understandable to have questions when coping with a new and challenging situation,
especially when a home is at stake. The reality is that millions of homeowners across
the country are finding out that they have more questions than answers. We hope that
the following information will help you better understand the circumstances. If you have
further questions not addressed below, or would like additional information resources,
feel free to Contact Us.
Do I qualify for a short sale?
The qualifications for a short sale include any or all of the following:
- Financial Hardship – There is a situation causing you to have trouble affording
- Monthly Income Shortfall – In other words: “You have more month than money.” A lender
will want to see that you cannot afford, or soon will not be able to afford your
- Insolvency – The lender will want to see that you do not have significant liquid
assets that would allow you to pay down your mortgage.
What is a mortgage modification?
A mortgage modification is a process through which your mortgage lender changes
any or all of the following:
- Your interest rate
- Your principal balance (through a reduction)
- Your loan terms (example: from an adjustable to a fixed rate)
This process can allow borrowers to stay in their property when they can no longer
afford their current mortgage payments.
Why would a lender modify my mortgage?
Lenders have realized that in some cases it is better for them to work with current
borrowers to lower payments or possibly improve terms in order to keep homeowners
in their properties. The average foreclosure can cost a lender from 35-50% of the
value of a property, so keeping borrowers in their homes is a good option for everyone.
What do I need to qualify for a mortgage modification?
According to the Making Home Affordable Web site (www.MakingHomeAffordable.gov),
you will need the following information for your lender to consider a modification:
- Information about your first mortgage, such as your monthly mortgage statement
- Information about any second mortgage or home equity line of credit on the house
- Account balances and minimum monthly payments due on all of your credit cards
- Account balances and monthly payments on all your other debts such as student loans
and car loans
- Your most recent income tax return
- Information about your savings and other assets
- Information about the monthly gross (before tax) income of your household, including
recent pay stubs if you receive them or documentation of income you receive from
If applicable, it may also be helpful to have a letter describing any circumstances
that caused your income to reduce or expenses to increase (job loss, divorce, illness,
How do I qualify for a mortgage modification?
The first call you make should be to your lender, have the information above ready
to discuss with them and call your customer service line to ask them what options
you have available. If the person you speak with does not understand what you are
asking, you can ask to be referred to one of the following departments (different
lenders have different names for these departments):
- Loss Mitigation
- Mortgage Modification
Prior to contacting your mortgage lender you can quickly complete an eligibility
test at www.MakingHomeAffordable.gov. This test will let you know if you are eligible
for a modification through the government-sponsored Home Affordability and Stability
Program (HASP). For a list of mortgage lenders and servicers, visit www.HopeNow.com.
What if I don’t qualify for a mortgage modification, can’t afford my home, and owe
more than it’s worth?
You are not alone and foreclosure is not the only option. If your mortgage lender
or servicer will not work with you to reduce your payment, you may want to consider
a short sale. Agents like me, with the Certified Distressed Property Expert® Designation,
have undergone extensive training in how to process and negotiate short sales. A
short sale allows you to sell your home for less than what you owe and avoid foreclosure.
Speak to your market expert to see if you may qualify.
What is a Home Affordable Refinance?
If Fannie Mae or Freddie Mac owns your mortgage, you may be eligible for a Home
Affordable Refinance. This will allow you to refinance your home and often lower
What are the qualifications for a Home Affordable Refinance?
According to the resources released by the government, following are a list of qualifications:
- You are the owner occupant of a one- to four-unit home
- The loan on your property is owned or securitized by Fannie Mae or Freddie Mac (see
- At the time you apply, you are current on your mortgage payments (you haven’t been
more than 30 days late on your mortgage payment in the last 12 months, or if you
have had the loan for less than 12 months, you have never missed a payment)
- You believe that the amount you owe on your first mortgage is about the same or
slightly less than the current value of your house
- You have income sufficient to support the new mortgage payments, and the refinance
improves the long-term affordability or stability of your loan