FHA Loan After Loan Modification And Waiting Period Guidelines


This BLOG On FHA Loan After Loan Modification And Waiting Period Guidelines Was UPDATED On June 13th, 2019

A Loan Modification is an alternative to foreclosure where the homeowner’s current mortgage lender will modify their current home loan.

  • Loan Modifications are done and granted by lenders because the borrower cannot afford their current mortgage payment.
  • Borrowers cannot afford their payments either because they had a reduction of household income or the mortgage went payment went substantially higher due to being an adjustable rate mortgage.
  • Loan Modifications are done by either reducing the interest rate or forgiving part of the mortgage loan balance so the mortgage payments are affordable to the homeowner.
  • Lenders do not want the property and rather work with homeowners than take the property through the foreclosure process.

Loan Modification Process And Qualifying For FHA Loan After Loan Modification

  • To be eligible for a loan modification, the homeowner needs to be employed.
  • Lenders will require financials of the homeowner.
  • Tax returns, W2s, and paycheck stubs need to be reviewed by the current mortgage lender.
  • The mortgage lender will come up with a monthly mortgage payment where the homeowner can afford.
  • Homeowners who go through a loan modification can qualify for FHA Loan After Modification one year after the date of modification.

Loan Modification Alternative To Foreclosure

To modify mortgage loan is an alternative to foreclosure to homeowners who cannot afford their current loan payment:

  • It helps modify the current mortgage so the homeowner can afford the newly modified mortgage.
  • The true purpose of modifying one’s mortgage for homeowners to be able to make their mortgage payments.
  • All delinquent mortgage payments can be added on to the back of the loan balance or forgiven.
  • A loan modification is a second chance given by the lender to homeowners who had a sudden change in income, or other such extenuating circumstances.

Loan Modification Process Timeline

Loan modifications have long gotten a bad rap with lenders.

  • Homeowners are given a trial period
  • Lenders had a reputation of giving homeowners a trial period and not approving loan modifications
  • Many times, lenders foreclose upon a property as opposed to granting loan modification after a trial period

The process for a loan modification can be initiated in one of two ways, as follows.

Loan Modification: What Is HAMP?

Homeowners with Fannie Mae and/or Freddie Mac Conventional Loans may be eligible for a loan modification through the Home Affordable Modification Program, also known as the HAMP.

  • The HAMP, of course, has fairly stringent inclusion
  • There are specific terms such as the loan must have been initiated on or before Jan 1st, 2009
  • The borrower must be able to prove beyond a reasonable doubt their financial hardship (and thus need for a loan modification)
  • This is a fantastic option for anyone seeking a loan modification

Private Mortgage Modifications

Homeowners who have a mortgage should be aware that private mortgage lenders are not required to honor HAMP, but they certainly have the option to do so.

  • There are quite a few companies who may contact to speed the entire program
  • To be quite honest, using services such as this are risky, as they can’t really guarantee success
  • Truly only Fannie Mae and Freddie Mac loans are sure to be eligible for a loan modification
  • To find out if you’re eligible, visit http://makinghomeaffordable.gov site, which will give homeowners great advice on what to do
  • Of course, another good option is to contact the mortgage lender and talk about it with them
  • Make sure to pay your mortgage during the loan modification application and trial process

Types Of Loan Modification

  • There are various ways to renegotiate your mortgage
  • The way you do so could be any of the following
  • A reduction in your payments monthly
  • Possibly for a fixed time period
  • Interest rate reduction
  • Switching to a fixed rate mortgage

There are many other ways to modify a mortgage loan. Make sure to contact us with any questions on this topic.

Waiting Period After Loan Modification: 2019 Update

There is a one-year mandatory waiting period to qualify for FHA Loan after a loan modification. For more information on this topic or other mortgage-related topics, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at gcho@loancabin.com.

1 Comment
  1. Thomas Peterson says

    It was helpful that you mentioned that loan modification can help modify your mortgage so you can better afford it. I’ve been needing to find some help with my mortgage after getting hit in a round of lay-offs. Maybe a loan modification can help me with being able to afford it better. Alex Carlucci and Mike Gracz of Gustan Cho Associates Mortgage Group really helped me out with their mortgage expertise. Massimo Ressa and Piotr Bieda were the upper level managers who gave me a rate exception. Martyna Szettel and Dale Elenteny helped me with asking my realtor and the sellers for an extension. Like to thank Kim Lambert, the senior processing manager at Gustan Cho Associates.

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