Are you having a difficult time making your monthly mortgage payment? If so, the first thing you need to know is that you are not alone. At any given time, thousands of homeowners are encountering situations in which they have trouble meeting their mortgage obligations, and for a myriad of reasons. For many homeowners, 2020 has been especially difficult, as the economic impact of the COVID-19 health crisis continues to cause problems even now. 

If you are struggling with your current mortgage payment, you have a few options. Two of the most common are refinancing your loan or modifying your existing loan. Loan modification and a refinance might seem similar at first glance, but they have very important differences that you need to keep in mind.

Across the country, moratoriums have been placed on eviction and foreclosure proceedings as a result of the COVID-19 crisis. At the end of August, the Federal Housing Finance Agency (FHFA) announced that it was extending the foreclosure moratorium for federally-backed single-family home mortgages until the end of the year at the earliest. The moratorium was set to expire on August 31, but the FHFA recognized that many homeowners still face serious struggles when it comes to making their mortgage payments. While non-federally-backed mortgages are not directly affected by the moratorium, most private lenders have followed suit and are holding off on foreclosure proceedings for the time being.

If you have fallen behind on your mortgage due to difficulties caused by the COVID-19 lockdown, you are probably not going to face foreclosure in the immediate future. You will, however, need to get caught up, as foreclosure will be a possibility at some point down the road. In order to bring your mortgage current, you will most likely need to request a loan modification. Most lenders are willing to work with borrowers who ask for a loan modification, but the application process can be challenging and confusing. In fact, it is not at all uncommon for a borrower’s first request to be denied. The good news is that a loan modification denial is not the end of the story.

A Denial Is Not All Bad

Being told no always hurts a little, but having your application for a loan modification denied can be scary. After all, if the lender will not agree to modify your loan, how will you ever get your mortgage back on track? The most important thing to do after a denial is to keep the bigger picture in mind.

When you are facing financial distress, you might explore options like modifying your mortgage loan terms or negotiating with your lender to avoid foreclosure. Foreclosure can have a substantial impact on your current and future credit, not to mention the loss of your home. If you are struggling to make your mortgage payments, a loan modification request might be the best way for you to get your 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 with additional information provided. If you are facing this situation, speak with an experienced bankruptcy attorney about your options.

You Have Insufficient Credit or Income

If you are denied due to having credit issues or not enough money to afford the modified loan terms, you will have to make changes in your daily lifestyle and expenditures. For example, if you have outstanding debt, pay at least some of it. If you cannot afford to pay your entire credit card balance, even paying a portion of it can help you. Similarly, if you cannot show that you have a certain amount of available cash, make changes like selling a vehicle or cutting unnecessary expenses like cable or dining out to save money.

You did not plan to fall behind on your mortgage. In fact, when you bought your home (or refinanced), you probably assumed that you would have more than enough income to make your payments each month. Unfortunately, things do not always go according to plan, and suddenly, you might now be several months behind and facing the possibility of foreclosure.

The good news is that if your lender has not initiated foreclosure proceedings yet, you have a number of options that could keep you in your home. Once the proceedings have begun, you will probably have fewer options, but some almost certainly still exist. Depending on your situation, your best bet may be to seek a mortgage loan modification.

Know Your Options

If you are like most homeowners, speaking with your lender about modifying your mortgage loan may be extremely intimidating. While laws have been passed and programs have been introduced to help struggling homeowners, the reality is that your lender holds most of the cards when it comes to the terms of a modification. There are, however, some ways to help the process go smoothly.

When you default on a loan for a commercial real estate project, it is easy to fear the worst. However, there are often many options for investors looking for assistance with getting a forbearance or a workout agreement with the lender. In order to protect your investment, however, you will need to act quickly.

Alternatives to Bankruptcy

In many parts of the country, the commercial real estate sector has continued to experience its share of challenges, leaving many businesses and investors in a cash crunch and unable to pay their loans. Some people mistakenly believe that the only way out of a default or distressed loan is bankruptcy. However, there are often other options available. 

With the help of a knowledgeable lawyer, you might be able to negotiate an agreement with the lender that avoids a foreclosure and bankruptcy. Lenders often do not want to deal with a foreclosure any more than you do. In fact, if you will eventually be able to get your loan caught up, it will usually make the most financial sense for your lender to work out some type of arrangement with you. With careful representation, you may be able to secure a forbearance agreement with the lender that gives you more time to get current on the loan.