A Loan Modification is a permanent change in one or more of the terms of a mortgagor's loan, allows the loan to
be reinstated, and results in a payment the mortgagor can afford.
Question 1: In utilizing the Loan Modification option to bring an asset current, can the mortgagee include all fees
and corporate advances?
Answer: Mortgagee Letter 2008-21 states in part: Legal fees and related foreclosure costs for work
actually completed and applicable to the current default episode may be capitalized into the modified principal
balance.
Question 2: May a mortgagee perform an interior inspection of the property if they have concerns about
property condition?
Answer: Yes, the mortgagee may conduct any review it deems necessary to verify that the property has no
physical conditions which adversely impact the mortgagor's continued ability to support the modified mortgage
payment.
Question 3: Can a mortgagee include late charges in the Loan Modification?
Answer: Mortgagee Letter 2008-21 states that accrued late charges should be waived by the mortgagee at
the time of the Loan Modification.
Question 4: When utilizing a Loan Modification option, can a mortgagee capitalize an escrow advance for
Homeowner's Association fees?
Answer: HUD Handbook 4330.1 REV-5, Paragraph 2-1, Section B, Escrow Obligations states: Mortgagees
must also escrow funds for those items which, if not paid, would create liens on the property positioned ahead of
the FHA-insured mortgage.
Question 5: Is there a new basis interest rate which mortgagees may assess when completing a Loan
Modification?
Answer: Yes, Mortgagee Letter 2008-21 states that the new basis interest rate is 200 points above the
monthly average yield on U.S. Treasury Securities, adjusted to a constant maturity of 10 years.
Question 6: Will HUD subordinate a Partial Claim, should a mortgagor subsequently default and qualify for a
Loan Modification?
Answer: If a mortgagor subsequently defaults and qualifies for a Loan Modification, HUD will subordinate
the Partial Claim.
Question 7: Are mortgagees required to perform an escrow analysis when completing a Loan Modification?
Answer: Yes, mortgagees are to perform a retroactive escrow analysis at the time the Loan Modification to
ensure that the delinquent payments being capitalized reflect the actual escrow requirements required for those
months capitalized.
Question 8: Is the mortgagor eligible for the upfront premium refund at payoff of a modified loan?
Answer: It depends upon when the closing date occurred. For assets closed: After July 1, 1991 but before
January 1, 2001, the 7-year unearned premium refund schedule shown in Mortgagee Letter 1994-1 remains in
effect, On or after January 1, 2001 that are subsequently refinanced, the 5-year refund schedule shown in the
attachment of Mortgagee Letter 2000-46 applies, or On or after December 8, 2004, refunds of upfront MIP are
eliminated except, when the mortgagor refinances to another FHA insured mortgage. The refund schedule
attached to Mortgagee Letter 2005-03 has been modified to a 3-year period.
Question 9: Can a mortgagee qualify an asset for the Loan Modification option when the mortgagor is
unemployed, the spouse is employed, but the spouse name is not on the mortgage?
Answer: Based upon this scenario, the mortgagee should conduct a financial review of the household
income and expenses to determine if surplus income is sufficient to meet the new modified mortgage payment,
but insufficient to pay back the arrearage. Once this process has been completed the mortgagee should then
consult with their legal counsel to determine if the asset is eligible for a Loan Modification since the spouse is not
on the original mortgage.
Question 10: What can loss mitigation do for me?
Answer: The goal of loss mitigation is to work out an agreement between the homeowner and the lender that
will stop foreclosure proceedings permanently. This allows the homeowner to stay in their home and protects
their credit history.
Question 11: How long do I have to act?
Answer: Time is of the essence when you are behind on house payments. Time is definitely not your friend in
this situation. Each day that passes makes it that much harder to get a work out agreement with your lender that
you can live with. The home foreclosure process can take anywhere from a few weeks to many months,
depending on your state law and the method of foreclosure your lender chooses to use.
Question 12: Several companies contacted me recently offering help. What makes First Liberty Law Group,
PLLC different?
Answer: There are many predatory companies who are not what they appear to be. Beware of unscrupulous
companies who are actually just interested in buying your house at big discount, or attorneys who just want to
take you into bankruptcy or companies that collect a consultation fee then do nothing for you. We have some of
the most experienced and well respected specialists in the industry whose sole purpose is to save your house,
not buy it, sell it, or send you into bankruptcy. Give us a call, speak with one of our professionals and judge for
yourself. The consultation is FREE.
Question 13: How much do you charge to start procedure?
Answer: Our low flat fees are based on your mortgage amount, and the complexity and urgency of your
situation. Our professional loss mitigation attorneys will evaluate your case and explain the best options to save
your home. We are confident that you will feel that our fees are a bargain compared to the cost of the
alternatives. We offer a money back guarantee if we cannot get you a work out agreement with your lender(s) as
long as no sale date has been set.
Question 14: I've already talked with my lender and they just want all their money. Can you still help me?
Answer: Yes. Most of our clients have experienced this kind of inflexibility from their lenders before calling us.
We get your bank to listen to your needs because we are your attorney, not a third party or service providers.
We have mitigated thousands of home foreclosure cases. That kind of experience gives us credibility with your
lender. Over the years we have developed positive working relationships with key people at most banks. Our
integrity and professionalism have earned us a reputation that allows us to be heard when no one else can get
through the red tape. We will use our experience and connections to your advantage.
Question 15: Should I file for bankruptcy to save my house?
Answer: No! That usually doesn't work. The American Bar Association has reported that 96% of homeowners
who declare bankruptcy end up losing their home to foreclosure anyway. Bankruptcy is very unlikely to help you
save your home. If you declare bankruptcy you will likely end up with BOTH a bankruptcy and a foreclosure on
your credit report.
Question 16: Do I need to have a special type of mortgage loan for First Liberty Law Group to help me?
Answer: No. We specialize in out-of-court resolutions of government and non-government mortgage
delinquencies or home foreclosure claims for homeowners. These can be FHA, Rural Administration, VA, Freddie
Mac, Fannie Mae, or conventional loans which have become delinquent.
Question 17: What if I can no longer afford my home? Can First Liberty Law Group still help me?
Answer: Yes. If you are certain that you cannot afford your home any longer and wish to sell, we can help you to
secure a short sale payoff or a deed-in lieu of foreclosure agreement with your lender. Often times these
agreements can be arranged at low or no cost to you.
be reinstated, and results in a payment the mortgagor can afford.
Question 1: In utilizing the Loan Modification option to bring an asset current, can the mortgagee include all fees
and corporate advances?
Answer: Mortgagee Letter 2008-21 states in part: Legal fees and related foreclosure costs for work
actually completed and applicable to the current default episode may be capitalized into the modified principal
balance.
Question 2: May a mortgagee perform an interior inspection of the property if they have concerns about
property condition?
Answer: Yes, the mortgagee may conduct any review it deems necessary to verify that the property has no
physical conditions which adversely impact the mortgagor's continued ability to support the modified mortgage
payment.
Question 3: Can a mortgagee include late charges in the Loan Modification?
Answer: Mortgagee Letter 2008-21 states that accrued late charges should be waived by the mortgagee at
the time of the Loan Modification.
Question 4: When utilizing a Loan Modification option, can a mortgagee capitalize an escrow advance for
Homeowner's Association fees?
Answer: HUD Handbook 4330.1 REV-5, Paragraph 2-1, Section B, Escrow Obligations states: Mortgagees
must also escrow funds for those items which, if not paid, would create liens on the property positioned ahead of
the FHA-insured mortgage.
Question 5: Is there a new basis interest rate which mortgagees may assess when completing a Loan
Modification?
Answer: Yes, Mortgagee Letter 2008-21 states that the new basis interest rate is 200 points above the
monthly average yield on U.S. Treasury Securities, adjusted to a constant maturity of 10 years.
Question 6: Will HUD subordinate a Partial Claim, should a mortgagor subsequently default and qualify for a
Loan Modification?
Answer: If a mortgagor subsequently defaults and qualifies for a Loan Modification, HUD will subordinate
the Partial Claim.
Question 7: Are mortgagees required to perform an escrow analysis when completing a Loan Modification?
Answer: Yes, mortgagees are to perform a retroactive escrow analysis at the time the Loan Modification to
ensure that the delinquent payments being capitalized reflect the actual escrow requirements required for those
months capitalized.
Question 8: Is the mortgagor eligible for the upfront premium refund at payoff of a modified loan?
Answer: It depends upon when the closing date occurred. For assets closed: After July 1, 1991 but before
January 1, 2001, the 7-year unearned premium refund schedule shown in Mortgagee Letter 1994-1 remains in
effect, On or after January 1, 2001 that are subsequently refinanced, the 5-year refund schedule shown in the
attachment of Mortgagee Letter 2000-46 applies, or On or after December 8, 2004, refunds of upfront MIP are
eliminated except, when the mortgagor refinances to another FHA insured mortgage. The refund schedule
attached to Mortgagee Letter 2005-03 has been modified to a 3-year period.
Question 9: Can a mortgagee qualify an asset for the Loan Modification option when the mortgagor is
unemployed, the spouse is employed, but the spouse name is not on the mortgage?
Answer: Based upon this scenario, the mortgagee should conduct a financial review of the household
income and expenses to determine if surplus income is sufficient to meet the new modified mortgage payment,
but insufficient to pay back the arrearage. Once this process has been completed the mortgagee should then
consult with their legal counsel to determine if the asset is eligible for a Loan Modification since the spouse is not
on the original mortgage.
Question 10: What can loss mitigation do for me?
Answer: The goal of loss mitigation is to work out an agreement between the homeowner and the lender that
will stop foreclosure proceedings permanently. This allows the homeowner to stay in their home and protects
their credit history.
Question 11: How long do I have to act?
Answer: Time is of the essence when you are behind on house payments. Time is definitely not your friend in
this situation. Each day that passes makes it that much harder to get a work out agreement with your lender that
you can live with. The home foreclosure process can take anywhere from a few weeks to many months,
depending on your state law and the method of foreclosure your lender chooses to use.
Question 12: Several companies contacted me recently offering help. What makes First Liberty Law Group,
PLLC different?
Answer: There are many predatory companies who are not what they appear to be. Beware of unscrupulous
companies who are actually just interested in buying your house at big discount, or attorneys who just want to
take you into bankruptcy or companies that collect a consultation fee then do nothing for you. We have some of
the most experienced and well respected specialists in the industry whose sole purpose is to save your house,
not buy it, sell it, or send you into bankruptcy. Give us a call, speak with one of our professionals and judge for
yourself. The consultation is FREE.
Question 13: How much do you charge to start procedure?
Answer: Our low flat fees are based on your mortgage amount, and the complexity and urgency of your
situation. Our professional loss mitigation attorneys will evaluate your case and explain the best options to save
your home. We are confident that you will feel that our fees are a bargain compared to the cost of the
alternatives. We offer a money back guarantee if we cannot get you a work out agreement with your lender(s) as
long as no sale date has been set.
Question 14: I've already talked with my lender and they just want all their money. Can you still help me?
Answer: Yes. Most of our clients have experienced this kind of inflexibility from their lenders before calling us.
We get your bank to listen to your needs because we are your attorney, not a third party or service providers.
We have mitigated thousands of home foreclosure cases. That kind of experience gives us credibility with your
lender. Over the years we have developed positive working relationships with key people at most banks. Our
integrity and professionalism have earned us a reputation that allows us to be heard when no one else can get
through the red tape. We will use our experience and connections to your advantage.
Question 15: Should I file for bankruptcy to save my house?
Answer: No! That usually doesn't work. The American Bar Association has reported that 96% of homeowners
who declare bankruptcy end up losing their home to foreclosure anyway. Bankruptcy is very unlikely to help you
save your home. If you declare bankruptcy you will likely end up with BOTH a bankruptcy and a foreclosure on
your credit report.
Question 16: Do I need to have a special type of mortgage loan for First Liberty Law Group to help me?
Answer: No. We specialize in out-of-court resolutions of government and non-government mortgage
delinquencies or home foreclosure claims for homeowners. These can be FHA, Rural Administration, VA, Freddie
Mac, Fannie Mae, or conventional loans which have become delinquent.
Question 17: What if I can no longer afford my home? Can First Liberty Law Group still help me?
Answer: Yes. If you are certain that you cannot afford your home any longer and wish to sell, we can help you to
secure a short sale payoff or a deed-in lieu of foreclosure agreement with your lender. Often times these
agreements can be arranged at low or no cost to you.
| Loan Modification Frequently Asked Questions |
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