Loss of income, unemployment, divorce, medical emergency, etc. – these are just some of the reasons why Americans fail to keep up with their mortgage payments and end up defaulting. The worst part is once you start falling behind on your payments, it is very difficult to get back on track. Some people think that chapter 13 bankruptcy is the only option they have to protect themselves from losing their home to the lender, but there is another way.
Since foreclosing a property is a costly process for lenders, they are willing to work with homeowners to find ways to help them make their payments. One solution they offer is home loan modification, also known as mortgage modification. However, there are several potential pitfalls associated with this option, and it is advisable to have a foreclosure defense attorney by your side when considering home loan modification.
How Home Loan Modification Works
It refers to permanent restructuring of your home loan, in which the lender changes the terms of your mortgage to make it easier for you to make regular payments. The lender may agree to make any of the following changes to your mortgage plan:
- Putting a cap on the monthly payment to a certain household income percentage
- Waive off some of the principle balance or some penalties
- Lengthen the term of the loan
- Reduce or eliminate late fees
- Reduce the interest rate
- Mortgage forbearance program
If you want to apply for a home loan modification, you have to submit an application to the lender or mortgage servicer. You will have to attach certain documents with it such as bank statements and recent paystubs.
How a Home Loan Modification can help you
The foremost benefit of opting for home loan modification is that it saves your home from being foreclosed. It works in those situations as well where foreclosure is already scheduled. Moreover, a short sale doesn’t hurt your credit score as much as a foreclosure sale does. A home loan modification makes the mortgage affordable, as the modified payment plan is based on your current financial situation.
Do you need an Attorney for Mortgage Modification?
Here are a few good reasons why hiring an attorney for a home loan modification is a good idea:
- They can help you get the best loan modification option from the lender with more flexible terms.
- Some lenders trick homeowners into believing they will get mortgage modification so they stop fighting, but are foreclosed later on. The attorney can avoid this situation altogether.
- Since there is a lot of paperwork involved in the loan modification process, the attorney can take care of this daunting task for you.
- An experienced attorney will know how to prevent your loan modification application from being rejected.
- Lenders are willing to negotiate and show more flexibility in modifying loans for homeowners with legal representation.
If you have received a notice for foreclosure, you need to act fast and talk to a foreclosure defense attorney to help you devise your way forward. Contact the Law Office of Brian Covert at (630) 717-2783 or online to schedule a free consultation. We have offices in several areas of Illinois, including Schaumburg, Warrenville, and Naperville.