Could Applying for a Loan Modification Help Me Avoid Foreclosure?

 Posted on November 07, 2019 in Loan Modification

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.

Make an Offer

Many borrowers who are facing foreclosure call their lenders and beg for help—but without any real plan or ideas of their own. If you are serious about a loan modification, sit down with your spouse—and your attorney—and come up with a proposal that you can afford. Your proposal could include elements of all of the various types of loan modifications, or you could stick to just one. As part of your proposal, be sure to break down your debt-to-income (DTI) ratio, your net present value (NPV), and other indicators that will show your ability to meet your obligations. By being proactive and coming up with a plan, you might stand a better chance of obtaining the modification you need.

A Denial Is Not the End

Applying for a loan modification has its advantages, even if you are denied. First of all, it shows the lender—and the court, in the event things get that far—that you are serious about keeping your home. Your submitted application also generally extends the timeline of the foreclosure process, as the bank must make a decision on your case. However long the bank takes to do so, it will not be seen as you doing nothing to keep your home.

Finally, a denied application will help you understand what the lender would need to see in order to approve a modification. It can be hard to determine a good starting place, but a denial gives you one. Based on the reasons for your denial, you can restructure your proposal and try again.

Call a Waukegan Foreclosure Lawyer

As you put together a loan modification proposal and application, it is a good idea to work closely with an experienced Lake County loan modification attorney. Call 847-549-0000 to schedule a free phone consultation and case review at Newland & Newland, L.L.P. today. We will help you understand your options and provide the guidance you need as you work to keep your home.

Sources:

https://www.knowyouroptions.com/options-to-stay-in-your-home/overview/modify-overview/modification

https://www.thebalance.com/loan-modifications-315514