Loan Modifications Are Not a Foreclosure Defense

Loan modification in foreclosure prevention is often a complicated process, mostly if you're first offered the chance to do so. However, some techniques and strategies are used to help get your lender even to consider approving a loan modification to your mortgage. This option enables a homeowner to catch up on past due mortgage payments to prevent the possibility of a foreclosure proceeding. A loan modification is sometimes used to avoid the even further option of home foreclosure. Listed below are a few tips on how to utilize loan modification in foreclosure prevention:

Determine If You Qualify for a Loan Modification in Foreclosure Prevention - Several factors determine whether or not you qualify for a loan modification in foreclosure prevention. These include your current level of living expenses, your monthly income, the amount of your mortgage, and your monthly debt. If one of these areas is too low and you have not been able to increase it through any reasonable means, it may be necessary to file for bankruptcy. When your debt exceeds your income, then you may be considered a candidate for a loan workout. If this is the case, you should consult a certified public accountant or an expert in tax law.

Calculate Alternative Costs - If you cannot prove that you will be unable to keep your home due to some reasons such as bad credit, loss of employment, and inability to pay interest rates on second mortgages, then your loan workout option may be to file for Chapter thirteen bankruptcy. While this will leave a chapter seven judgment against your name, it will also lower your mortgage interest rate and extend the terms of your loan modification agreement for two years or until you can prove that you can make your new payments. This is the best option for borrowers who are just about to lose their homes due to failure to make required payments. If you file a Chapter thirteen bankruptcy, you will also be protected from any further lawsuits against you by the mortgagee.

Referrals - You should contact a reputable attorney or tax lawyer to obtain information regarding loan modifications. The attorney or tax lawyer may be able to negotiate with your lenders for a modified payment plan that is beneficial to both parties. Your lenders usually initiate such negotiations. The attorney can also help you deal with the bank and its collection agents. In most cases, attorneys charge a flat fee and will be paid a percentage of any loan modifications or Bankruptcies received.

Prepare For a Court Hearing - It is advisable to hire a foreclosure defense attorney to represent you in your loan modification proceedings. Attorneys usually have the experience and knowledge to represent you in a lending institution or lender court. If you decide to pursue this option, you should understand that banks do not want to risk having to go to court. It is usually the best option to settle for a payment plan that you can afford to pay on time to avoid foreclosure.

Refinance Loan Modification - There may be some situations where you will be granted a new mortgage modification to stop the foreclosure process. This might include employment changes, increases in monthly payments, or other unforeseen expenses. Before you apply, request a copy of your mortgage payment history, any late fees, and other related documents from the lender. If the lender approves your loan modification, you can expect to get a letter from them indicating that your mortgage company has approved a new foreclosure prevention plan. You will have to sign this document in front of a notary public.

Bankruptcy - If you cannot afford to pay your mortgage payments, you should consider applying for a bankruptcy loss mitigation. Most homeowners who have filed for bankruptcy protection have been granted a new loan modification agreement. However, bankruptcy cannot be used as a foreclosure defense law, and lenders are required to disclose this fact before you sign on the dotted line. You can work with a bankruptcy lawyer to apply for the most favorable terms. He or she will also be able to advise you on appealing the duration of your mortgage contract.

Loan Modification in Foreclosure - There are special programs available to help those facing financial difficulties to pay their mortgages. Loan modification in foreclosure is one such program. The federal government offers assistance to those who need help paying their mortgage. Your loan modification attorney will explain all available options and help you weigh your options. A loan modification in foreclosure is very different from bankruptcy, and you should not choose this option lightly. A lawyer can help you understand the requirements of the law and your specific situation.