When an individual is falling behind on mortgage payments, they still have options to consider. One option they may explore would be working to get a loan modification. To learn the difference between loan modifications and mortgage refinancing, plus what you can expect in the loan modification process, continue reading and reach out to our experienced Rockland County loan modification attorney.
Loan Modification vs. Mortgage Refinancing
In order to discover which option is best for you and your financial situation, you must understand the difference between loan modifications and mortgage refinancing. The purpose of a loan modification is to adjust an existing loan. Modifying your loan will place back payments you owe back into the loan so you can start beginning making monthly loan payments again. During this process in some cases, some banks may readjust your interest rate to current rates. Mortgage refinancing is where an individual seeks a new loan instead of adjusting an existing loan.
What can I expect in the loan modification process?
Before the bank can proceed with a foreclosure and sell the property, New York State law requires foreclosure lawsuits that affect a residential property to be assigned to the Foreclosure Settlement Conference Part. This is put into place to allow homeowners to have the opportunity to apply for a loan modification and allow the bank to review their financial ability to determine if they qualify for a government loan modification program or the bank’s internal loan modification program.
Individuals will be required to provide the following documents to the bank for ther loan modification application after the bank reviews their financial ability:
- A personal or business bank statement
- A personal business bank statement
- Personal or business tax returns
- Pay stubs from each wage earner in your family
- A current utility bill
- A financial statement or profit and loss statement
- A hardship letter with the reason for your default and current ability to pay the mortgage
What reasons are loan modification applications denied?
The banks may not approve a loan modification if the homeowner cannot prove sufficient income to pay their monthly mortgage. The bank may take possession of the house and cut its losses if the mortgage can’t be returned to its current status. However, if the mortgage can be returned to its current status, the loan may be modified.
If you have any further questions about loan modification applications, do not hesitate to reach out to our experienced Rockland County bankruptcy attorney.
Contact our experienced New York firm
Bankruptcy, for many people, is a frightening endeavor. 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.