What is the Loss Mitigation Program?

suburban residential home

If you believe it is time to file a Bankruptcy case, you are most likely under a lot of stress. Fortunately, you have several options that may help limit your current financial situation’s severity. When you file a bankruptcy case to stop a foreclosure of your home, you are entitled to apply to the Loss Mitigation Program of the Bankruptcy Court. The main purpose of the Loss Mitigation Program is to allow you request a loan modification, which requires the bank to review your financial ability to determine whether you qualify for one of the Government loan modification programs, or the bank’s internal loan modification program. Here are some of the questions you may have:

What documents will I have to provide to the bank?

When you apply for a loan modification, there are several documents the bank will require you provide. They are as follows:

  • Personal or business bank statements
  • Personal or business tax returns
  • Financial statements or Profit & Loss Statements
  • A Hardship Letter explaining the reason for your default and your current ability to pay the mortgage
  • Paystubs from each wage earner in your family
  • A current utility bill proving you reside in the home

What are the benefits of hiring an attorney?

For one, the Law Offices of Allen A. Kolber, Esq. has a relationship with nearly every law firm that represents the banks in New York State, with paralegals who know most of the loan mod paralegals at those firms. Because of this, we submit our client’s packages directly to the law firm, as well as the bank representative during the Foreclosure Settlement process. Additionally, an experienced attorney will help prepare the Financial Statements or Profit & Loss Statements that best represent your financial ability to qualify for a loan modification. You should keep in mind that banks will not approve a loan modification if you are unable to provide sufficient income to pay your monthly mortgage. However, 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. A knowledgeable attorney will help you reach the outcome you desire. 

Are there any alternatives to loan modification in the Loss Mitigation Program?

Fortunately, there are. To avoid a foreclosure on your house and satisfy the lender, you may choose any of the following solutions that fall under the Loss Mitigation Program:

  • Short sale
  • Forbearance
  • Loan refinance
  • Surrender of the property in full satisfaction
  • A combination of the methods listed above

Contact our New York firm

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.