Are you behind on your mortgage? If so, are you getting to the point where you are worried about the possibility of foreclosure? When you are behind on your mortgage payments, things can spiral out of your control very quickly. It is important to realize, however, that you may have options that could allow you to keep your home and to get back in good standing with your lender. One of these options is a loan modification, and a skilled Lake County lawyer can help you apply.

Your Loan Will Not Be Modified If You Do Not Apply

A loan modification, put simply, is an amendment to the terms of your loan so that you can get caught up and back on track with your mortgage. There are different types of modifications available, such as an extension of the loan’s term to reduce monthly payments, interest rate adjustment, and the capitalization of your missed payments. While each type of loan modification is different, they have one thing in common: you cannot get a modification unless you apply for one.

Unfortunately, getting your modification application complete and in front of decision-makers at your lender is not always easy. The individuals who answer the phone when you call are not always clear about what your application package needs to include or whether they have received everything you sent them. The key to resolving the situation is getting the application requirements in writing, sending your application package to your lender—using mail, fax, and email, if necessary—and following up to ensure it is received.

After a software error that occurred in Wells Fargo's system sometime between April 2010 and October 2015, a settlement has finally been reached between the company and some 6,000 mortgage holders who were impacted by the error. The software error caused customers to be incorrectly denied modifications on their loans and repayment plans when they actually should have qualified. In several cases, foreclosure proceedings began after the denials.

The Beginning Issue

Wells Fargo used to be a shining example of how a big bank should be run, but now they can not seem to stay out of the news for all the things they have done wrong. They recently revealed an error in their mortgage underwriting software that resulted in hundreds of denied mortgage modifications for borrowers who were facing foreclosure. The error affected some mortgages that were foreclosed on between April 2010 and October 2015. The error created a miscalculation of attorney fees that were used to determine if a borrower qualified for loan modification.

The error resulted in some 625 customers being denied modification and out of those customers, some 400 of them were foreclosed on after being denied. Wells Fargo has set aside $8 million to use as remediation for the customers who were affected by the error. While this may seem like a lot, it only equals out to $12,800 per customer, hardly adequate compensation for losing a home.

When you are facing financial distress, you might explore options like modifying your mortgage loan terms or negotiating with your creditors to avoid bankruptcy. Filing for bankruptcy can have a substantial impact on your current and future credit and in many cases, bankruptcy is too extreme of a remedy for the issues an individual faces. In cases like this, modification of a mortgage loan's terms can be the right way for an individual to get his or her debt under control.

Requesting a loan modification does not always result in an approval. Your request can be denied for a variety of reasons. In many of these cases, it is possible to resubmit the request and potentially have it approved a second time. If you are facing this situation, speak with an experienced bankruptcy attorney about your options.

Trulia, a leader in the real estate industry, recently reported that refinance rates for a 30 year fixed mortgage in Waukegan, Illinois can be obtained for as low as 2.250 percent. Trulia further reported that the median sales price of a home in Waukegan is $91,250, a 30.4 percent home value increase as previously reported a year ago.

This may come as welcomed news for prospective sellers but for those homeowners facing financial difficulty, possible foreclosure and in receipt of a loan modification denial by their original lender, this news falls on deaf ears.

If you recently received a formal denial of your loan modification request in hopes of adjusting your original loan terms and to halt possible foreclosure status, your best line of defense is to contact an experienced foreclosure attorney to discuss whether any of the following infractions may have lead to the denial.