Many financially sound families today find themselves in financial situations they never have been in before, and never expected to be in. The current economic climate has been tough on many, but don’t lose hope. Most lenders, especially mortgage lenders, are willing to talk about ways to help you through these times. The last thing a family wants to do is lose their home, and they know that.
Your current financial situation may just not be able to meet the terms of your original mortgage agreement, and a loan modification can allow you essentially “make a new deal” with your mortgage company so that you can keep up with payments. These modifications usually reduce the current payments you have to make and move the outstanding current debt to the back of the original loan.
Loan modifications are not uncommon today, and your mortgage company probably has programs already in place to help you out. Once the new terms are agreed to, your mortgage once again becomes current, and you’ll have a payment you can handle easier every month. These modifications usually go on for a specific time, and when you are able, you can revert to your original terms.
The key to successfully negotiating these deals is to work with a local Plymouth loan modification attorney dedicated to getting your life and finances back on track. They will get you the best terms and make sure you don’t miss any “loopholes” that you may regret later on.
What is Involved in the Loan Modification Process?
Many things can occur that cause you to be in your current financial situation. This can be due to job loss, sudden illness, accidents, and even the death of a family member. Whatever the reason, a loan modification will make your monthly payment affordable once again and bring your account current. Most lenders prefer helping until you’re “back on your feet” rather than going through the lengthy, costly, and complex foreclosure process.
Discuss all the financial details with your loan modification lawyer, and come up with a viable plan that works for you now. Then contact and communicate with your loan servicer. Usually, you (or possibly your lawyer) will speak with someone in the “loss mitigation” or “loan modification” department. They usually do, but be sure to ask them to keep a computerized log of your conversations as you may need to refer to them in the future.
You need to organize all of your current financial documents for your lawyer to formulate a rational and workable plan to present to the lender. They’ll want to know your financial situation as of right now, so you can show you can afford the reduced monthly amount.
You may even have to fill out a new application, but the more organized you are, the more successful you will be at solving this serious issue. Your Massachusetts bankruptcy or loan modification lawyer will be invaluable in this step of the process so your plan is presented clearly and is proven to be an achievable current financial solution.
What is the 90 Day “Right to Cure” and How Can It Help Me?
When your lender claims you are in default of your loan, they must serve you with a written notice. This notice will formally tell you that you are in default of your loan and have 90 days to find a solution to the problem.
This “right to cure” period gives you the time to either pay the back payments, or to apply for a loan modification to solve the problem. If you receive a default notice, it is essentially an informal way of telling you that you may be facing foreclosure.
You have the right and should ask for a detailed accounting of all your mortgage payments to date. You should ask for a detailed report, including their attorney’s fees, costs, and all late charges. Your loan modification attorney will know how to decipher this paperwork (which is often complex) and make sure it is accurate and all charges are valid.
There may be amounts in escrow for taxes, etc., and charges that are excessive, or just not correct. If you use this 90-day “right to cure” period wisely, in many cases, the charges, fees, and other costs in the lender’s accounting can be reduced or even dropped in your new loan agreement.
What is the Overall Purpose of a Loan Modification?
The main reason for a loan modification is to allow you to keep your home during difficult financial times and to prevent foreclosure.
Some of the aspects of a modification are:
- The modification may lower your interest rate.
- It may extend the length of your loan, but the payments may increase over time.
- It may reduce the principal of the loan, but this is unusual, and yet another area in which your attorney can help.
- It may increase your loan obligation, and even include a large balloon payment at some time during the loan.
The reasons for your immediate financial hardship may be numerous, but if the home is your primary residence, you should almost always be able to come to some agreement with your lender for a reasonable modification.
There can be considerable work involved, such as; a collection of documents, preparation of the proposal to the lender, and negotiation of the terms. It is a legal way to keep your home, both for you and your family, while you are recovering from a limited financial setback.
Your loan modification attorney will be invaluable in both helping you secure the most favorable loan terms, while also making sure that you understand all the pertinent financial details involved in the modification and how you, your family, and your finances may be affected.