It is important for people to keep track of their finances. When financial troubles happen, it can be an overwhelming and difficult part of a homeowner’s life, but it is important not to panic. If a homeowner is struggling to stay on top of their mortgage payments, there are options for that can save their house from foreclosure. When facing a situation like this, it is possible to get a loan modification. A loan modification may assist an individual in debt so that they may make their payments. An experienced attorney in Rockland County can help guide you through the process.
What is Loan Modification?
When a homeowner has difficulty with their mortgage payments, they may wish to seek help through a loan modification. Loan modifications allow you to adjust your loan so that it better suits your situation. This can be done by matching your mortgage payments with your current financial situation so that you are able to start making payments again at a comfortable pace.
It is important to understand that a loan modification is not the same as mortgage refinancing. While they can both help those experiencing financial difficulty, they do not have the same process. There are two types of loan modification programs:
- Bank-Run: This type of modification program may lower an individual’s interest rate, fix an adjustable rate, or not require an individual to pay excess principal.
- Government-Run: A government loan modification program allows an individual to lengthen their loan to a 40-year plan that lowers the cost of monthly payments. This program also drops the interest rate of a loan to 2% for a 5 year period to help the individual meet their payments accordingly.
New York State laws require properties that may foreclose to be assigned to the Foreclosure Settlement Conference Part. Through this process, the bank goes over your finances and determines if you may qualify for a modification program, whether it may be government or bank run. After this is reviewed, you must provide the bank with certain documents to apply for a loan modification. Certain documents include:
- A financial statement
- A personal or business bank statement
- Pay stubs from contributing family members
- Tax returns
- A hardship letter explaining why you cannot make the mortgage payments
- A current utility bill that proves residence
Banks follow a certain set of guidelines in order to determine an individual’s approval for a loan modification. A bank will only approve the modification if it is proven that you are able to continue making payments through the updated plan. If the bank does not believe the homeowner has the income to maintain the payments, they may not approve of the modification and take possession of their house.
Contact Our Firm
If you are in danger of home foreclosure and need a loan modification, contact the Law Offices of Allen A. Kobler, Esq. today.
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.