Options To Avoid Foreclosure Or Bankruptcy
Mortgage loan modification may sound intimidating to the average homeowner but the actual process may be simpler than you think. Outlined below are some of the various options available with modification.
If you are behind on your mortgage payments and in financial hardship, loan modification or mortgage restructuring could be the most effective tool available to save you and your home from foreclosure. It is the fastest growing mortgage relief remedy available today.
Borrowers whose mortgage became delinquent because of a job loss, a divorce action, or medical issue, were at one time, the only candidates eligible for a loan modification. Today, modifications are also open to those who are unable to make their monthly payments during times of skyrocketing adjustable rate mortgages.
Mortgage Modification Agreements
When borrowers can no longer meet the financial requirements to make their monthly mortgage payments they can turn to a mortgage modification if refinancing is not an option. Modification agreements come in various forms, but quite often they involve reducing the interest rate of the mortgage for a specified time period so the homeowner can continue to make payments and stay in the home. Mortgage loan modification is a permanent change in the terms of your existing loan.
DIY Or Hire A Pro?
Homeowners have the ability to negotiate a loan modification on their own (DIY), but without knowing who to call or what to say, a bank is unlikely to arrange a loan workout. Whether you attempt to perform loan modification on your own or get assistance from an attorney or a professional modification company, you have a good chance of success if you act on time and follow directions. Let Loan Modification Connection help you save your home.
No matter which route you take, you will need specific documentation such as W2s, most recent pay-stub, and for self-employed customers, bank statements and sometimes tax returns. The amount of paperwork and the complexity of the situation makes the process very difficult, especially if this is the first time you are applying for modification.
Subprime Mortgages Loans And Balloon Payments
Homeowners who were involved in subprime mortgage loans with balloon payments are eligible for debt relief through lower rate loan modifications.
Modifications & Recent Legislation
Both state legislation and Congressional initiatives require mortgage lenders to make every effort to provide a loan modification for struggling homeowners who want to avoid foreclosure.
Mortgage Modification Or Mortgage Refinancing?
Mortgage refinancing should always be the homeownerâ€™s first option, but many people simply do not qualify for an FHA home refinance loan, whether itâ€™s a government or a traditional rate and term mortgage.
If you can not refinance or sell your home because of a decrease in value, mortgage modification or restructuring may help. Loan modification programs continue to invade the mortgage market, because so many homeowners are being turned down by their lender when looking for a mortgage refinancing loan.
Loss Mitigation With A Mortgage Loan Shortfall
Mortgage loss mitigation is a legal process where mortgage lenders work with homeowners to create a more affordable home loan scenario.
Lenders have an interest in offering concessions to troubled homeowners because the costs of foreclosure are high. Lenders may restructure a mortgage loan by a reduction in the interest rate, an extension of the length of the loan, a reduced principal balance, reduction in the amount of accrued back payments or late fees, as well as many other options to allow you the affordability to pay your mortgage.
Mortgage modification or other loss mitigation services are available to help you lower your payment without refinancing your mortgage.
Short sales have become a more popular exit strategy for homeowners who believe they can't afford the home with or without the mortgage modification option. They conclude that the mortgage balance is so much greater than their property value that they would rather sell it short and move on. Hiring a real estate agent specializing in short sales is usually the best option in most real estate markets as they are experienced with the process.
To participate in a legally negotiated short sale, the homeowner still has to negotiate with the lender to allow the sale to go through. The short sale appeals to the lender as it indicates your concern for loss mitigation.
Foreclosure and the risk of losing your home is one of the most stressful things a family can experience. Foreclosure can be avoided, even though banks have routinely foreclosed on properties and sold the homes to other buyers for a fraction of the original price.
Foreclosure is a very costly procedure for lenders. According the Joint Economic Committee of Congress, the average foreclosure costs $77,935. A recessionary housing market makes it difficult for lenders to sell the foreclosed properties and then recover any additional funds from the previous homeowners.
Loan Modification Connection
To avoid foreclosure, homeowners have two options, refinance with an FHA home loan or modify their existing mortgage with a reduced principal balance and/or lower interest rates.
For many, mortgage modification equates to a home saving necessity and a fresh start with true relief from their mortgage financing hardship.
There is no need to file for bankruptcy or go through with a short sale when you can get a loan modification that will make you current and keep you in your home.
Filing bankruptcy can certainly delay foreclosure but if you miss one payment while in bankruptcy, your mortgage lender can still force a foreclosure. Filing for bankruptcy may NOT relieve you of your obligation to repay your mortgage, the foreclosure may still proceed, and your credit score may be damaged for the rest of your life.
When a lawyer files the bankruptcy, it forces the lending company to dismiss or suspend their foreclosure. If you are considering filing bankruptcy to prevent or stall foreclosure, speak with a licensed attorney who specializes in bankruptcy and foreclosure prevention before taking any other action.
Mortgage modification is not the only option for homeowners trying to avoid foreclosure due to late mortgage payments. Mortgage loan modification may very well be the right solution for you. Also note, loan modifications during foreclosure vary from state to state, so speak with an attorney who specializes in bankruptcy and foreclosures within your state jurisdiction for assistance. Contact the Lexington Law Firm for answers to your bankruptcy questions.
More About ...
When you get into a tight place and everything goes against you, till it seems as though you could not hold on a minute longer, never give up then, for that is just the place and time that the tide will turn.
~ Harriet Beecher Stowe
Financial Freedom RSS Feed
To achieve financial freedom, ideas such as: listening to good advice, learning how to make a budget, understanding credit repair possibilities, avoiding the scams, and generally becoming more knowledgeable of the credit card business, can all play a role in eliminating credit card and other debt. There is A smarter way to manage your money.