• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Sonoma County Mortgages

Contact Us About Mortgage Financing

All financing provided by New American Funding

(707) 217-4000 | Prequalify Now

Search Sonoma County Mortgages

  • Home
  • Purchase
    • How Much Down Payment To Buy A Home?
    • How Much Income You Need To Buy A Home
    • How Much Should I Save For Buying A Home?
      • How Rates Affect Payment
    • No PMI Mortgages
    • FHA Loans
    • Sonoma County Disaster Loans
    • Jumbo Loans
  • Refinance
    • Mortgage Rates
    • Does It Make Sense To Refinance?
      • Get Your Refi Paperwork In Order
    • How To Pay Off Your Loan Faster
    • How To Remove PMI
    • How Lenders Price & Quote Loans
  • Loan Programs
  • Payment Calculator
    • Mortgage Affordability Calculator
  • Blog
  • Videos
  • About SCM
  • About Scott Sheldon

Primary Sidebar

Sonoma County Mortgages is a part of New American Funding

New American Funding - NMLS #6606

Get Your Latest Rate Quote Now!

How To Land A Mortgage Post Loan Modification

April 24, 2015 by Scott Sheldon

Share on Facebook Share on Twitter Share on Pinterest Share on LinkedIn Share on Email

If you completed a loan modification in the past, you’ll need to meet certain credit thresholds to get a green light for a new loan. What to know…

What Is A Loan Modification?
A loan modification also known as a restructured mortgage is a loan in which the original terms of the transaction changed resulting in the restructuring of the debt through a modification of the original loan or origination of that loan that results in any one of the following scenarios:
• Forgiveness of any portion of the principal balance or interest on either a first mortgage or a second mortgage (equity line for example)
• Any principal curtailment on or behalf of the mortgage loan creditor/investor to offer principal forgiveness
• Any conversion of any portion of the original mortgage loan debt to a soft subordinate mortgage or a silent second
• Any conversion of any portion of the original mortgage loan debt from secured to unsecured.

The most common forms of loan modifications had to do with rate and payment restructuring when borrowers were unable to refinance. Another common strategy for mortgage companies was to offer principal curtailment and rather than forgive debt. The difference was repositioned as a lien on the home in the form of a silent second mortgage, which did not come into play until the home was refinanced or sold.

It is important to note a loan modification is different from refinance. A loan restructuring changes the terms of the original mortgage where a refinance pays off the original mortgage loan in exchange for another. Most homeowners these days need not seek loan modifications, because they now have equity coupled with more loan program offering i.e. HARP 2. Most banks are not promoting loan modifications anymore as the economy has shifted tremendously from just a few years ago where people were climbing out of the recession from being underwater on their homes. However while the popularity of loan modifications have dropped, the wounds remain for these homeowners with credit stain from a previous restructuring.

The Low Down

If a modified mortgage is in your past then these rules apply:

24 months -of timely mortgage payments must have been made on that mortgage after the restructuring was completed. It is this black-and-white. Even if there was a second mortgage in place that was restructured, this same waiting time remains in place. This applies to a primary home, a secondary home or an investment property.
Separate Property– If you are purchasing or refinancing another property independent of the property that has a restructured loan a one-year waiting time frame applies.

If your previous loan modification contained a forbearance, a period of time where you did not make a mortgage payment for whatever reason and the additional interest was tacked onto the principal balance of the mortgage at the time the restructuring was completed or if there was a principal balance forgiveness, it’s going to be up to the individual mortgage company to make that ‘sign off’. Generally, mortgage loan companies frown on this even if you have met the twenty four month or twelve month requirement depending on your individual circumstances.

Should Your Loan Be Refinanced Or Modified?

If your mortgage loan servicer is offering you a lower monthly mortgage payment make sure it is a bona fide refinance offer, not simply just doing you a favor because you a customer. Do not be fooled, banks always have a profit motive. If you are the slightest unsure as to whether or not the loan offer you’re receiving is a loan modification or refinance, be smart, get it in writing.

The best outcome to remain creditworthy is refinancing when compared against pursuing a loan restructure. If refinancing is not an option, perhaps due to home equity for example or a heavy debt load and loan modifying is an option with your current loan servicer, know that you’re going to be limited on your future mortgage options for 1 to 2 years. Additionally, lenders are required to report modified/restructured mortgages on the tri-merge credit report mortgage banks use to make credit decisions. This is how banks pick up on red flag derogatory credit events, via a financial services credit report. Even if you didn’t have any missed mortgage payments, a restructured mortgage can still be a red flag from a credit reporting perspective. More than likely will not hurt your credit score, but it may hurt your mortgage eligibility.

Are you’re trying to get a mortgage, but have a previous loan modification in your past preventing you from qualifying? Give us a shot. Begin by getting a complementary mortgage rate quote for your refinance or home purchase today.

 

Related Mortgage Advice from Scott Sheldon

  • mortgage after loan modification
    Mortgage after loan modification? Here's how...

    One of the challenges many homeowners faced in the recession was financial hardships. Loan modifications…

  • Does My Loan Type Hurt My Credit Score?

    Future favorable financing deals, low rates and preferred credit offerings all will be available depending…

  • Will Credit Cards Help Me Land A Mortgage?

    Well? Yes and No, read on.... Like it or not, your relationship with money can…

  • Mortgage Insurance: Consumer Tips On PMI & Advoidance

    Mortgage Insurance is like the plague to a monthly mortgage payment. It makes the cost…

Filed Under: Loan Qualifying, Mortgage Shopping, Mortgage Tips & Advice, Pre-Approval Tagged With: BAD CREDIT MORTGAGE, buying a house, home buying in Sonoma County, loan programs, mortgage after loan modification, qualifying for a mortgage

Get Sonoma County Mortgages News and Updates in Your Inbox

Footer

SCM on Facebook

SonomaCountyMortgages.com

Connect on Facebook

SCM On Instagram

Follow Sonoma County Mortgages on Instagram

Follow on Instagram

SCM on Zillow

Zillow Reviews for Scott Sheldon, New American Funding

See Reviews on Zillow

Location & Contact

Sonoma County Mortgages and New American Funding are an Equal Opportunity Housing Lender

Scott Sheldon, Senior Loan Officer
NMLS ID# 287389
1450 Neotomas Ave Suite 115
Santa Rosa, CA 95405
1-707-217-4000
View SCM Map | Email Us!

Map of Sonoma County Mortgages New American Financing Office

View Map on Google

Copyright 2010–2022 SonomaCountyMortgages.com · About Us · Sonoma County Loans · Privacy Policy · Terms Of Use · Legal · Site Map

NMLS Consumer Access © New American Funding. All rights Reserved. NMLS ID#6606.
Corporate Office 14511 Myford Road, Suite 100, Tustin, CA 92780. We at New American Funding take great pride in our customer service and make it our number one priority. We encourage you to contact us for complaint resolution or any post-closing questions you may have regarding the servicing of your loan. We strive to have your experience with New American Funding a stellar one. In the rare case that our service did not meet your expectations, please call our customer care hotline at 1-800- 450-2010, ext. 7100 or you may contact us by email customerservice@nafinc.com. Please leave a detailed message and we will follow up with you no later than the end of the next business day. If you are using a screen reader or other auxiliary aid and are having problems using this website, please call 800-450-2010 Ext. 7100 for assistance.

State Licensing (Opens in New Window) | Privacy (Opens in New Window)
Terms of Use (Opens in New Window) | Electronic Consent Agreement (Opens in New Window)
Opens in new window Opens an external site Opens an external site in a new window