What is a loan modification?

If your family is behind on mortgage payments, you may need a loan modification. Loan modifications are a means for you to work with your lender to better match your mortgage payments with your financial situation. The primary fear of homeowners is a foreclosure on their house. Where will you live? How will your lifestyle change? Will you have to move? Fortunately, there may be something you can do to sleep soundly at night once again. If you believe it is time to apply for a loan modification, here are some of the questions you may have:

Do I qualify for a loan modification?

Currently, every foreclosure lawsuit that affects a residential property must be assigned to the Foreclosure Settlement Conference Part before a bank can proceed with the foreclosure and sale. During this settlement process, you may apply for a loan modification and require the bank to review your financial ability to determine whether you qualify for one of the government loan modification programs or a bank’s internal loan modification. Some of the documents you will have to provide to the bank are as follows:

  • A current utility bill proving you reside in your home
  • Personal or business bank statements
  • Paystubs from each wage earner in your family
  • Financial statements or profit & loss statements
  • Personal or business tax returns
  • A hardship letter to explain why you cannot currently pay your mortgage

How can a loan modification help me?

A successful government loan modification will lower your interest rate to 2%, extend your loan term to 40 years, and allow for lower monthly payments. Some of the banks’ internal programs may lower your interest rate, forgive excess principal, fix an adjustable rate, or place your defaulted payments at the end of the loan, to be paid when you sell the house or refinance. Ultimately, a loan modification may be just what you need to get back on track towards financial stability. If you think you are ready to request a loan modification, please do not hesitate to contact our experienced bankruptcy firm.

When individuals are facing financial troubles, one of the areas that might affect them is their mortgage payments. There are some options that they have to assist with this situation. Loan modifications are something to consider. With this, your loan can be adjusted to better fit your financial situation and to allow you comfortability to pay at your own pace. Financial situations are always rough. They have the ability to impact all aspects of our lives. That is why it is important to know and understand processes that can help with your finances. Our professional attorneys can guide you toward a resolution to ease your stress.

There is a difference between loan modification and mortgage refinancing. They are not the same process, but they both have the ability to aid during times of financial distress. Mortgage refinancing is when an individual seeks a new loan instead of adjusting an existing loan. Loan modification adjusts a present loan to improve upon the situation that the debtor is in.

How is a hardship letter involved in the loan modification process?

When requesting a loan modification, there are documents that you must provide throughout the process. 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. The hardship letter is intended to explain the reasoning for your current financial situation Applicants are required to detail the reason for their inability to pay the mortgage.

Why may I get denied?

For the loan modification process, banks can refuse applicants for many reasons. Banks may not approve a loan modification if the homeowner cannot prove sufficient income to pay their monthly mortgage. This prediction can have a big impact on the applicant. When banks are reviewing applicants’ files, they have a set of guidelines to follow in order to determine if an approval is the right decision. 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.

During this time, it is helpful to have a professional attorney on your side. They can better prepare you for the process. With legal counsel, you may have a chance at getting a loan modification approved.

Contact our experienced New York firm

The thought of bankruptcy can be scary. Fortunately, with the help of an experienced attorney, it does not have to be. 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. We will have your back every step of the way.