What is important to know about loan modifications?

If you are behind in your mortgage payments, it is important to know that there are ways to save your house from foreclosure. Don’t panic, you have options. A loan modification attorney can help you determine your best course of action and help you save your home.

Loan modification means that you are simply modifying your loan so that the back payments you owe (the “arrears”) are placed back into the loan, and you can start making your monthly loan payments again.  Sometimes the bank will readjust your interest rate to current rates.   Please note that this is not the same thing as mortgage refinancing, which is where you pay off your current loan for a new one. To apply for a loan modification, you will have to provide the bank with several documents so they can determine whether you are eligible. These documents include a hardship letter stating why you can’t make payments, financial statements, tax returns, bank statements, utility bills that show you live in the house, and pay stubs from each person in the family who works.

If the homeowner can’t prove that they have the funds to pay their mortgage, the bank will not want to assist them or approve them for a modification. If the bank feels the homeowner won’t be able to continue making payments, the home may go into foreclosure.

There are two types of loan modification programs: bank-run and government-run. Government loan modification programs allow you to extend your loan to a 40-year plan so you can have lower payments each month. Additionally, your interest rate will be dropped to 2-percent for a period of 5 years to make monthly payments more manageable. Bank-run loan modification programs may lower your interest rate, fix an adjustable rate, or even not require you to pay excess principal.

If you need assistance in trying to save your home, contact an experienced loan modification attorney who can help you get started. 

If you require the services of an experienced bankruptcy attorney, contact the Law Offices of Allen A. Kolber, Esq. today to schedule a free consultation and discuss your options.