Avoiding Foreclosure With a Loan Modification

A client recently learned that the same can be said of a lender’s promises during negotiations for a loan modification.

What you need to do is contact your current lender, or you can have an outside company do it for you, and let them know of your inability to pay your monthly mortgage payments because of your current situation.

These homeowners had hired another law firm to represent them during the loanmodification process. The lender had delayed a foreclosure sale several timeswhile negotiations were ongoing. Without notice to the homeowners, the lenderdecided to cease negotiations on a Friday and conducted the foreclosure auction the following Monday. The home they had occupied for 15 years was sold to a third party bidder and now there is little they can do to save their home.

Here are some simple guidelines of the loan modification.

·     The house must be a primary dwelling; you must live there and this cannot be a rental property.
·     The original loan should have been closed on or before January 1, 2009.
·     The mortgage amount  must be between $1 – $729,750.
·     Your current payment must total more than 31% of your gross monthly income. In this figure you are allowed to include your property taxes – homeowner’s insurance – and any associational dues that may include maintenance and condo fees.
·     You will need to show your state of financial hardship over which you had no control. This must be documented with the appropriate paperwork and will be verified.
·     You also must be able to prove your ability to pay the new modified monthly payment with your current income.

It is also possible get so far behind that a Chapter 13 bankruptcy repayment plan might not be able to help a borrower save their home. Before
starting the loan modification process, consider the following tips:

• Hire an experienced mortgage attorney to examine your loan documents for potential violations of laws such as the Truth in Lending Act or the Real Estate Settlement Procedures Act. This may give you leverage in the negotiation process.
• Obtain a complete written life of loan history to see if there any inappropriate charges and fees included in their mortgage balance.
• Do not spend the money you would have used to make your house payments. Consider setting the money aside in a separate bank account.The lender might require a “good faith” payment at some point in time during the process and you will want to have those funds available if needed.
• Get all assurances in writing. If the lender does foreclose, written assurances could be used in legal proceedings to set aside the sale.
• Have a bankruptcy attorney on standby. The automatic stay can stop a foreclosure sale before it happens. A debtor can also use a Chapter 13
Avoiding Foreclosure

In this economy, negotiating a loan modification can be very risky yet very beneficial given the right circumstances. Make sure to learn more about the loan modification process before you talk to your lender.

Avoiding Foreclosure With a Loan Modification relate post:  disadvantages of reserve mortgage   CITIMORTGAGE    wells fargo mortgage recovery    obama’s streamline refinance