If you’re falling behind in mortgage payments, do not panic. There are options to consider when you are struggling. When families face situations like this, they can work to get a loan modification. In order to do so, you will need to work with your lender to match your mortgage payments with your financial situation. These situations can be stressful and emotional for people. The uncertainty that comes with financial troubles can lead to an overwhelming amount of stress. To have a better handle on situations like these, reach out for our legal counsel during this time. We can guide you throughout the situation to create a smooth process.
What’s the difference between loan modification and mortgage refinancing?
It is important to know the difference between loan modification and mortgage refinancing in order to undergo the process of either one. Mortgage refinancing is when an individual seeks a new loan instead of adjusting an existing loan. Loan modification adjusts a present loan to better the situation of the debtor.
What is the process for a loan modification like?
Under New York State laws, foreclosure lawsuits that affect a residential property have to be assigned to the Foreclosure Settlement Conference Part before the bank can proceed with a foreclosure and sell the property. The purpose of this process is to give homeowners the opportunity to apply for a loan modification. Through this settlement process, the bank is also required to review your financial ability. This is to determine whether you qualify for one of the government loan modification programs or the bank’s internal loan modification program.
Once the review is made, there is a list of documents that you must provide the bank with. This applies to any loan modification application. These documents include a financial statement or profit and loss statement, a personal or business bank statement, pay stubs from each wage earner in your family, personal or business tax returns, a current utility bill proving you reside in the house and a hardship letter. This hardship letter is required to explain the reason for your default and your current ability to pay the mortgage.
Banks may not approve a loan modification if the homeowner cannot prove sufficient income to pay their monthly mortgage. They have a set of guidelines to follow in order to determine an approval. If the mortgage can be returned to a current status, then the loan may be modified. If it cannot, then the bank may take possession of the house and cut its losses.
Our skilled attorneys can help process these documents in an efficient manner. We can help provide a smooth transition for you during this difficult time.
If you require the services of an experienced Business Law or Bankruptcy attorney, contact the Law Offices of Allen A. Kolber, Esq.today to schedule a consultation and discuss your options.