If your mortgage lender sends you a letter asking for all of your late payments, plus all late fees, fines, and legal fees to take effect, the process they deal with is called returning your insurance. . Your lender views the overdue amounts as being behind the terms of your home insurance. This requires them to ask you to catch up or they should foreclose on you and take your house. Can a home insurance modification avoid this process and get your approval without having to pay such a large amount? If the answer is yes, why is this true? You may ask, what is the difference between a home insurance refund and modification?
The request for a letter of payment received by the borrower depends on the terms of the insurance. Only installment payments are allowed as shown in your insurance documents. If you are late on your payments, you will still be bound by the terms of your contract with the lender. There is no language in your insurance that allows for changes. So the lender has no choice but to collect or foreclose. You have defaulted and the only contractual way to become a trader is to pay all amounts that are past due. Then your insurance is reinstated and you can keep your home as long as you keep making payments on time. This process is called restore.
But the problem with the recovery process is that if you’re too late, you won’t be able to find enough cash to make up for it all at once. The language of your insurance then leads to foreclosures that you cannot stop.
Unless… you are able to enter into an agreement with the lender to “change” the language and terms of your insurance. This type of situation requires “modification” of your insurance. You modify the terms to enable you to continue to own and pay for your home. Lowering the interest will involve lowering your monthly payment and taking your unpaid payments back on your insurance. The new terms will have the effect of creating new monthly payments, which will be at your fingertips. Your monthly payments will now fit into your monthly budget.
Why would the lender do this? Because your lender loses a lot of money when they take out their house. This is complicated, but the costs a lender must pay can include:
1. The cost of the foreclosure process going through the court system.
2. Your home will likely sell for a lower price today than it did just a few years ago due to the economy. If the lender receives less than what you owe them, they will lose that money.
3. Take care of your home during the sale. This includes large realtor commissions and utility and maintenance bills.
4. The lender borrowed money from a larger lender in order to lend you the money you used to buy your home. Your lender must repay this amount.
5. When your home is in foreclosure or sold, your lender cannot use it as an asset on the bank’s balance sheet. Then they are criticized by government regulators.
Well what does your lender want? First of all, the lender wants you to recoup your payments yourself and get them back.. If that is not possible and you can identify the problems you have been through that forced you to fall behind, then the lender wants to work with you. The lender wants you to show the error; What is different today? And how much can you afford. Then they should see if they can make your plan work from their point of view.
If you can agree on terms that work for both of you, you can change the words or terms of your insurance to include the new agreement. You will not get a new insurance or a refinance insurance. You will make a Home Insurance Amendment, which simply changes some of the insurance terms, so that it now includes your new agreements.
Home insurance adjustments are made thousands of times daily, due to the current housing crisis. You can do it yourself, if you are familiar with this process. However, this can be deceiving. I would like to meet several experts on the home insurance modification process. Find out what they promise, what they charge and if they will take payments. For my recommendation see my resource box below.