The Wells Fargo Loan Modification Plan Explained

Having trouble keeping your Wells Fargo mortgage current? Don’t worry—thousands of other homeowners are facing the same problem, and the good news is that it’s easy to get back on your feet. One of the best solutions is a Wells Fargo loan modification: basically a deal between you and the bank to rework your mortgage into more comfortable terms. With a Wells Fargo mortgage loan modification, you get to stay in your home, get your mortgage current, and stay on track over the long term.

There are two main ways to get a Wells Fargo mortgage modification: an in-house loan workout and a government-backed plan. This article walks you through both options and the pros and cons of each one.

Proprietary workout plans
The private loan modification plan is set by Wells Fargo itself, meaning they can change the rules as necessary. On one hand, this gives you more flexibility over your mortgage, as they can adjust the terms to suit your needs. On the other, you will have to negotiate harder with the bank to get the right terms, as there are no strict standards to follow. This is usually an option for those who don’t qualify for the federal loan modification plan.

The most common Wells Fargo loan modification under this plan is for an interest-only period, which can last up to ten years. In some cases, they can also agree to lower the payments for a given number of months. Terms similar to those of the federal program are also available, although they’re more susceptible to change.

Federal loan modification
Wells Fargo is also part of the government’s stimulus program, known as the Home Affordable Modification Plan (HAMP). The program offers an incentive to lenders who grant loan modifications to struggling homeowners. The main advantage of HAMP is that the standards are set, which means all you have to do is meet the guidelines. It may not offer a perfect fit like the Wells Fargo loan modification plan, but it guarantees comfortable rates.

HAMP evaluates homeowners for Wells Fargo loan modification using four factors: debt-to-income ratio, target payments, the home’s current value, and the current state of the mortgage loan. Each factor may weigh in differently according to the borrower’s situation, so it’s important to plan out your application.

For both plans, one can work directly with the bank or hire a loan modification company. If you choose the latter, however, it’s important to do your research and watch out for scam companies. Remember, when it’s your home at stake, it always pays to weigh your options and take on as little risk as possible.