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Creative Ways to Avoid Foreclosure Through a Loan Modification

 Posted on January 11, 2023 in Mortgage

Waukegan loan modification lawyerNationwide foreclosures are highest in California, New Jersey, and Illinois. Lake County in Illinois has some of the greatest numbers of foreclosures. Most homeowners will do everything in their power to save the home they worked so hard to purchase. At Newland & Newland, LLP, we offer a variety of creative ways to modify your existing loan through firm negotiation with your lender. An experienced real estate attorney can guide you through the process of a loan modification.

Modification Options

Before you reach any sort of agreement with your lender, you should consult with a real estate attorney who may be able to attain more favorable terms on your mortgage loan agreement. It is also important to understand your current financial situation and if it is likely to improve in the near future. The following are some creative ways we utilize to modify a mortgage loan:

  • Forbearance – This is a temporary suspension of your monthly payments. Interest will accrue and the principal in forbearance is due before the house can be sold or when the loan term ends.  

  • Partial Claim – If you are more than four months behind in payments and your home is insured by the Federal Housing Administration you may qualify for a partial claim in which missed payments and any fees you owe will be included in a second mortgage at zero percent interest. The total would have to be paid if you sell or refinance the house.

  • Capitalization of Arrears – The delinquent amount you owe is called arrears. A lender may roll that amount into the loan's principal, bringing you current on your payments, but the term of the loan will be extended or the monthly payment will increase.

  • Interest Rate Adjustment – This would make your monthly mortgage payments less, but it is only short-term. If your financial situation is not likely to get better a permanent rate reduction should be explored.

  • Term Extension – This can lower your monthly payment amount by increasing the number of payments over the life of the loan, but you would pay more in interest.

  • Repayment Plan – Rather than restructuring the terms of your mortgage, you may be able to reach a repayment agreement with your lender. This often entails an upfront payment and increased monthly payments until you are caught up on your past-due payments.

Contact a Waukegan Loan Modification Lawyer

At Newland & Newland, LLP, we have helped many families avoid foreclosure and remain in their homes through loan modification. An experienced Lake County loan modification attorney will try to make sure that the lender does not take advantage of you and your family. Call 847-549-0000 for a free consultation.





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