Loan Modification – A loan modification is a procedure where the original terms of a mortgage loan can be favorably changed to assist the borrower in making their payments.  It is not a refinance, but instead an adjustment to the existing note.  Negotiated and approved by the lender, a loan modification can lead to a change in the interest rate, the terms of repayment, the loan’s amortization or even a short term forbearance where the borrower is given time to recover from a financial setback… all of which are designed to make the loan affordable and ensure that the borrower can remain in the home.  If you have fallen behind on your mortgage, or have an ARM loan that is soon adjusting… a loan modification is the first and best opportunity to protect both your home and your credit.  The Center for Fair Lending is comprised of experienced former loss mitigation specialists from major lenders that can accurately and effectively negotiate an affordable and sustainable solution, and do so in a timely manner with their personal networks and knowledge of how to navigate the bureaucracies of today’s major lending institutions.

Short Refinancing – A short refinance is similar to a short sale in which the lender agrees to forgive a portion of the current loan’s remaining principal balance on a non-performing or high-risk loan in order to allow that borrower to refinance into a new loan – assuming the new loan provides more favorable terms and demonstrates a significantly higher probability of consistent payment.  This new loan can either be offered through the same lender, or through another lender depending on circumstances.  An additional option that is likely to become more common is the introduction of a “Hope Note” or “silent second lien” where instead of simply forgiving a portion of the balance in order to allow a refinance, the lender will hold a second lien that will only be payable should the home’s value appreciate in coming years and the borrower decides to either sell the home or attempt a cash out refinance transaction.  The Center for Fair Lending has the lending relationships and loan specialists on staff that can identify when a short refinance may be feasible, and both provide a government-insured loan through FNMA, FHLMC or FHA while negotiating the terms of a principle reduction with the lender.  Due to time and cost considerations, this is only attempted if a more favorable loan modification option isn’t available and the borrower is provided with a permanent affordable solution.

Short Sale – A short sale is a process that occurs when a home is worth less than what is currently owed and the lender accepts the proceeds of the sale at current market value.  In doing so, the lender will accept a payoff that is less than the current mortgage loan’s balance.  A short sale provides a solution for borrowers that can no longer afford their mortgage payment and a refinance or loan modification simply is not feasible or available.  It allows the borrower to avoid the foreclosure process and gives them the opportunity to both relieve themselves of a large debt on a depreciated asset and reduce any further negative impact to their credit rating.  When a Center for Fair Lending representative determines a short sale is appropriate, it is only after exhausting all other options for a borrower to stay in their home.  When the borrower agrees that a short sale is the best course of action, we have on staff former loss mitigation and REO specialists with years of previous experience in the review and approval of short sale applications, as well as open communication lines with major lenders to expedite the lender approval process.  Additionally, we maintain an extensive list of real estate professionals whose experience has been closely vetted who we may personally recommend should you not already have an agent relationship.

Deed in Lieu of Foreclosure – A “Deed in Lieu” is an option available to many borrowers who are not able to find a workable solution via a loan modification, and are unable to arrange for a short sale transaction that is agreeable for the lender.  In this process, a Center for Fair Lending representative will negotiate with the lender the terms of turning the property over to them without engaging in the protracted and expensive foreclosure process.  A Deed in Lieu is only proposed should all other options be unavailable, and the Center for Fair Lending’s experienced staff members will attempt the most favorable terms available, possibly even including small cash settlements to assist in the transition.