There are options for individuals to consider when they are falling behind on mortgage payments. One of the options you might consider would be working to get a loan modification. Continue reading to discover the difference between loan modifications and mortgage refinancing, plus, everything you can expect in the loan modification process. If you have any further questions regarding loan modifications, reach out to our experienced bankruptcy attorney today to learn more about our services and how we can assist you and your financial situation. We are here to help.
What is the difference between loan modification and mortgage refinancing?
Loan modification adjusts an existing loan. The purpose of modifying your loan is so that the back payments you owe are placed back into the loan and you can start making monthly loan payments again. Some banks may readjust your interest rate to current rates during this process. Mortgage refinancing is where an individual seeks a new loan instead of adjusting an existing loan. It is important to understand the difference between these two processes in order to discover which option is best for you and your financial situation.
What can I expect in the loan modification process?
New York State law requires foreclosure lawsuits that affect a residential property to be assigned to the Foreclosure Settlement Conference Part before the bank can proceed with a foreclosure and sell the property. This will allow homeowners to have the opportunity to apply for a loan modification. It also allows the bank to review your financial ability to determine whether you qualify for one of the government loan modifications programs or the bank’s internal loan modification program.
After the bank reviews your financial ability, you will provide a group of documents to the bank for your loan modification application. This will include the following documents:
- A financial statement or profit and loss statement
- A personal business bank statement
- Personal or business tax returns
- A current utility bill providing you reside in the house
- A personal or business bank statement
- Pay stubs from each wage earner in your family
- A hardship letter explaining the reason for your default and your current ability to pay the mortgage
What are the reasons loan modification applications are denied?
If the homeowner cannot prove sufficient income to pay their monthly mortgage, the banks may not approve a loan modification. If the mortgage cannot be returned to its current status, the bank may take possession of the house and cut its losses. However, if the mortgage can be returned to its current statute, the loan may be modified.
Contact our experienced New York firm
The Law Offices of Allen A. Kolber, Esq. effectively represent clients facing bankruptcy in Rockland County and all of New York State. Our firm understands the stress one can feel when facing a difficult financial future. Our compassionate staff will work to ease your fears and help you make a new start. If you need quality legal support, contact The Law Offices of Allen A. Kolber, Esq.