Myths and Truths about Loan Modifications. Is it worth applying? Maybe not.

Описание: Is it even worth applying for a loan modification? Did you know that where you live determines the likelihood of you getting a loan modification?. Check your state below and see if you live in a "Lien Theory" or "Title Theory" state and how it affects your chances of getting a loan modification. Loan Modification Attorney Diego G. Mendez, Esq. explains how where you live can determine the likelihood of you getting a loan modification. What are the loan modification requirements? Forbearance vs Refinance.

00:00 Intro
01:35 Applying While Current
02:17 Forbearance and Loan Modification
03:15 When Should You Apply?
04:45 Lien Theory State = More Time
05:36 Title Theory State = Less Time
07:00 Benefits of Forbearance
08:20 What to Expect If You Get An Offer
08:48 Myth of Principal Forgiveness
09:41 Is It Even Worth Applying?
11:10 End

LIEN THEORY STATES (More time to get loan modification) (From auction.com)

Bank must foreclose through a court case. Borrower has full set of possible defenses, including in many cases significant amounts of time. In lien theory states, the buyer, who is also the borrower, holds the deed to the real estate property for the life of the mortgage. The buyer promises to make payments on the mortgage according to the terms spelled out in the financing agreement. The mortgage agreement serves as the lender’s lien on the property until the loan is paid back completely, but the buyer holds the title to the property instead of the lender. The lien is extinguished when the loan is paid off in full.

These are the states where mortgage laws are defined by lien theory:

Arkansas
Connecticut
Delaware
Florida
Hawaii*
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland*
New Mexico
New York
North Dakota
Ohio
Oklahoma*
New Jersey
Pennsylvania
Puerto Rico
Rhode Island*
South Carolina
Vermont*
Wisconsin

TITLE THEORY STATES (Less time to get loan modification)

Bank does not to foreclose through a court case. Borrower has limited set of possible defenses, and significantly less time. In these jurisdictions lender conveys the title to the buyer who will then issue a Deed of Trust naming the lender or mortgagee as the beneficiary of the trust. The title to the property is held by a third party trustee who is given the power to foreclose should buyer fail to comply with the terms of the mortgage agreement. Rights of ownership and possession reside with the buyer according to the terms of the Deed of Trust. When the loan is completely satisfied, the lender issues and records a Deed of Reconveyance in favor of the borrower who will now have clear title to the property. The Deed of Reconveyance removes any interests that the lender may have in the property.

These are the title theory states:

Alabama*
Alaska
Arizona
California
Colorado
Washington D.C.
Georgia
Idaho
Massachusetts*
Michigan*
Minnesota*
Mississippi
Missouri
Montana*
Nebraska
Nevada
New Hampshire*
North Carolina
Oregon
South Dakota
Tennessee
Texas
Utah
Virginia
Washington State
West Virginia
Wyoming

A modified version of title and lien theories may also be used as the basis of evaluating mortgage laws. In intermediary theory states, the borrower retains the title with the express agreement that the lender can take back the title when the borrower defaults on the loan. States with an asterisk in both lists provided above are intermediary states. (From auction.com)