After the United States housing bubble burst in 2008, many homeowners were left with houses worth less than they owed on their loans. Consequently, people sought to refinance their homes through loan modification.

Government assistance programs like the Home Affordable Refinance Program (HARP) were established to help homeowners refinance their homes. Currently many banks and online companies offer loan modification services to qualifying consumers.

Top 10 Best Rated Harp Loan and Loan Modification Programs

LendingTree offers a wide range of loan services, including auto loans and mortgages. The company was founded by Doug Lebda in 1998, and it is headquartered in Charlotte, NC.
With more than 30 years of experience in lending, Quicken Loans has helped over two million consumers finance or refinance their homes. Quicken’s helpful online resources make it ideal for people new to loans and mortgages.
iFreedomDirect has been helping borrowers finance their homes since 1996. Specializing in FHA loans and loans for veterans, iFreedom Direct has headquarters in Salt Lake City with licensed loan officers operating nationwide.
A division of Nationstar Mortgage LLC, Greenlight Loans is a direct-to-consumer mortgage lender focused on custom loans and quick service. As a full-service lender, Greenlight offers loan modification and other services.
Making Home Affordable is a government program that launched in 2009 to help homeowners with loan modification. The Making Home Affordable website contains valuable resources for consumers looking for HARP and HAMP programs.
Founded in Salt Lake City in 1989, Select Portfolio Servicing, Inc. (SPS) is a mortgage servicer that specializes in single-family residential mortgages. SPS offers assistance with HAMP, HARP and other loan modification services.
Carrington Mortgage Services offers wholesale lending and mortgage services directly to consumers. These services include refinance and modification options, conventional loans, FHA loans, VA loans and more.
Hope Now is a support and guidance alliance between mortgage market participants like counselors, mortgage companies and others. Resources like modification scam alerts and counseling services help homeowners make smart decisions.
People’s First Financial is a full financial services firm that provides mortgage, real estate, financial and investment strategies. They specialize in loan modifications, VA loans and repayment plans among other services.
The Trinity Debt Management Program (DMP) helps consumers make informed financial decisions to take control of their repayment plans. The Trinity DMP reduces debts to one monthly payment, decreases interest rates and more.

The ConsumerAffairs Research Team believes everyone deserves to make smart decisions. We aim to provide readers with the most up-to-date information available about today's consumer products and services.

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Features and application considerations when looking at loan modification

How does loan modification help homeowners?

There are many individual reasons a consumer should apply for loan modification, but the most common is that loan modification can help save money. Load modification can offer homeowners options like lower interest rates or extended pay periods to better fit their budgets.

  • Lower interest rate: The primary reason to apply for loan modification is to find a lower loan interest rate. When homeowners apply for either a variable or fixed-rate loan, those interests rates can be renegotiated. A lower interest rate can lower monthly payments for homeowners struggling to make payments.
  • Convert from variable to fixed interest rate: A variable-rate or adjustable-rate home loan has an interest rate that can change, but, because interest rates generally increase, a homeowner with a variable rate can eventually be paying more than they are able. Some loan modification options allow homeowners to change their variable-rate loan to a fixed-rate loan that could lower the interest on monthly payments.
  • Adjust/extend pay period: Most home loans extend over either 15 or 30 years. If a homeowner with a 15-year loan can no longer keep up with monthly payments, they may be able to extend their pay period.

What are the steps to loan modification?

Loan modification is a complicated process involving consultation with a lender, broker or bank along with the required paperwork. Before applying for a loan modification, homeowners need to make sure they have the proper documentation.

  • Paperwork: For loan modification approval, homeowners must provide bank statements, a financial statement (these can be bills, unexpected expenses or other documentation of financial changes), hardship letter, proof of income and tax return information. This paperwork is required from all lenders, but specific banks and lenders may ask for additional information.
  • Communicating with lender/broker/bank: Loan modification can only happen after consultation with someone in charge of the loan. Should the homeowner wish to deal directly with a bank or lender or to work through a broker, they need to communicate clearly with their contact to make sure they go through all the right steps of the application process.

What is a hardship letter?

Loan modification will not be granted without a convincing letter of hardship from the applicant. This letter explains the applicant’s reasons for needing a loan modification. It should describe the specifics of the applicant’s financial situation and contain a few key elements.

  • Identifying information: The first item of the hardship letter should be the applicant’s identifying information: name, address, phone number, email address and loan account number.
  • Involuntary reductions of income: Any changes of income outside the applicant’s control—lay-offs, reduction of wages/hours, death of a borrower, disability, serious illness, divorce, etc.—are considered involuntary reductions of income. These should be listed and articulated clearly in the applicant’s hardship letter.
  • Unavoidable expense increase: Unexpected medical expenses, damage from natural disasters, increases in property taxes or adjustable interest rates, unavoidable childcare expenses and other expenses that cause financial stress should appear in the hardship letter.
  • Repayment plan and budget: Applicants should include a detailed plan for how the loan modification will help them. A proposed budget detailing plans for repayment as well as any mention of money currently set aside to pay to the lender as part of this plan. This information needs to be as comprehensive, specific and reasonable as possible. An accurate and clear payment plan increases the likelihood of approval.

What is a HARP loan and its requirements?

The Home Affordable Refinance Program, or HARP, was instituted by the Federal Housing Finance Agency (FHFA) in 2009 to help homeowners refinance their homes to better match their homes’ worth in the wake of the 2008 market crash. HARP has several requirements that must be met before its loan modification service is granted.

  • Loan acquirement date and type: A homeowner is only eligible for HARP if they acquired their loan on or before May 31, 2009—essentially before the market crash. The loan must also be owned by either the Federal Home Loan Mortgage Corporation (Freddie Mac) or the Federal National Mortgage Association (Fannie Mae). Both the Freddie Mac and Fannie Mae websites have loan look-up tools for homeowners looking for HARP eligibility.
  • Loan-to-value ratio: The homeowner’s current loan-to-value (LTV) ratio must be greater than 80 percent. LTV is calculated comparing the amount owed on the loan against the house’s actual value. For example, if the homeowner bought a house for $150,000 and post-crash, the house’s value dropped to $125,000, that owner’s first mortgage LTV would be 120 percent, making this homeowner eligible for HARP. LTV calculators can be found on almost any loan website.
  • Current standing on applicant’s mortgage: An applicant must be current on their mortgage payments. There must be no late payments in the last six months and no more than one late payment in the last 12 months. The home in question must also be the applicant’s primary residence, a one-unit second home or a one- to four-unit investment/rental property.
  • Deadline: The current deadline to apply for HARP is September 2017. The original end date was December 31, 2016, but the FHFA extended this deadline to September 2017.

Types of loan modification service providers

Full banks

Many home loans are handled through banks, usually the bank at which the homeowner already has an account. Talking with the bank’s loan officer can begin a discussion to see if loan modification is a viable course of action.

Brokers

Brokers are intermediaries between consumers and lenders. Brokers make the information provided by the lender comprehensible for the homeowner. Talking with a loan broker can help homeowners look for a loan modification that fits their needs.

Lenders

Lenders are the groups and banks that lend money directly to the consumer. They are usually affiliated with banks, and many online lenders are available to consult if a homeowner is looking for loan modification websites.

Marketplaces

Online marketplaces allow consumers to offer their loan information and have lenders compete for their business. Marketplaces allow consumers to see many loan quotes for comparison to find the best deals.

Who is a candidate for loan modification?

Victims of the housing market crash

After the housing market crash in 2008, many homeowners were left with houses worth less than their payment. Modifying a house loan, either through HARP or through a bank, broker or lender can lower monthly payments.

Homeowners trying to avoid foreclosure

Even homeowners who are not victims of the housing market crash can still run into financial trouble. Modifying a house loan to make smaller, more accessible payments could prevent foreclosure.

Company reviews

  • Quicken Loans

    Quicken Loans is an online mortgage lending company. Founded as Rock Financial in 1985, Quicken changed course in the 1990s to focus on online lending and has since become a leading mortgage lender.

    • Best for Quicken is best for consumers looking for instant information about mortgage refinancing.
  • New American Funding

    New American Funding is a national mortgage banker that has been in operation since 2003. Today, New American Funding operates branches across the United States and has multiple divisions in building and wholesale industries.

    • Best for New American funding is best for consumers who want to modify their home loans through a direct lender instead of a broker.

  • First Option Mortgage

    First Option Mortgage entered the loan industry in 2004. It is a full service mortgage bank headquartered in Atlanta and has offices across 23 states.

    • Best for First Option Mortgage is best for consumers looking for one central place to handle the entire loan process and prefer to work with a lender dedicated to customer service.

11 – 18 Best Rated Harp Loan and Loan Modification Programs

Mortgage Now is a loan service company that specializes in FHA lending. Mortgage Now prioritizes fast processing and closing services for applicants for FHA loans and operates in Calif., Md., N.J. and Pa.
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