Q. I’m in Foreclosure. Can you help me?
A. Our Attorney and staff know how the lenders operate, and there may be options available to you that can help you stop the foreclosure and arrange to bring back payments current.
Q. What is a loan modification?
A. A modification occurs any time any term of the original loan contract is permanently altered. This can involve a reduction in the interest rate, forgiveness of a portion of principal or extension of the maturity date of the loan.
A Loan Modification can change your existing mortgage note and possibly give you a fresh new start in managing your home. These changes can be in your interest rate, length (term) of the loan, late charges can be waived or added to principle, change from ARM mortgage to a fixed. There are several other possibilities and modifications that can be made. But it is on a case by case basis.
A large number of clients may find themselves using a Loan Modification Plan to stop foreclosure. In addition, if you can currently make your regular payment, but you can’t catch up with the past-due amount, we will attempt to negotiate with your lender to fold any past-due amounts, including interest and escrow, into the unpaid principal balance.
Q. Do you have any examples of Loan Modifications you’ve negotiated for you clients?
A. Yes. You may CLICK HERE to see some example of recent loan modifications we’ve negotiated. These are for illustration only, and we don’t guarantee you will receive exactly the same results.
Q. What is a loan workout?
A. A loan workout is just another term for loan modification. However it is more of a broad term and can be applied to several other loss mitigation techniques, such as negotiating a short sale and a deed in lieu of foreclosure.
Q. What is a loan forbearance?
A. Forbearance means you are allowed to delay or reduce payments for a short period, with the understanding that another option will be used at the close of that time to bring your account to a current status. Your lender, if in agreement, will then temporarily cease legal actions.
Lenders may agree to combine your Forbearance with Reinstatement or a Repayment Plan if you know you can provide the needed funds to bring your account current by a specific date. This plan works for people who have just experienced a sudden living expense increase or income loss. We will negotiate with your lender to explain this hardship and hopefully get you the time you need to readjust your spending and recover financially.
Q. What can loss mitigation do for you?
A. The goal of loss mitigation is to work out an agreement between the homeowner and the lender that will provide you with terms you can manage. This allows the homeowner to stay in their home and protects their credit history.
Some of the things that may be possible with a Loan Modification are:
- Bring your late payments current
- Lower your monthly payment
- Convert your ARM to a Low Fixed Rate
- Reduce your principal balance to sell or Refinance
- Modify your loan without refinancing
- Stop a foreclosure proceeding
- Avoid Bankruptcy
Q. Who is qualified for our program?
A. The program is for people facing a Financial Hardship who can prove their ability to make an affordable monthly payment on the modified mortgage note.
Q. What are “Financial Hardships” and do I qualify?
A. Here is an example list of hardships that lenders consider during the loan workout process:
- Adjustable Rate Mortgage Reset- Payment Stop (uncommon, but we will see more lenders accept this in the future)
- Illness
- Loss of Job
- Reduced Income
- Failed Business
- Job Relocation
- Death of Spouse or Co-Borrower
- Incarceration
- Divorce
- Marital Separation
- Military Duty
- Reduced Income
- Medical Bills
- Damage to Property (natural disaster or unnatural)
Q. Who Will Handle My Loan Modification?
A. Your loan modification negotiations will be handled by our Attorneys and their paralegals.
Q. What Kind of New Terms Can I Expect?
A. The first thing we tell our clients is that they need to be realistic. If someone owes $700,000 and can only afford a payment of $1,000 per month…that person can not afford their house. Each case is a unique one, and must be negotiated with the lender.
Q. What if I can no longer afford my home? Can you still help me?
A. If you are certain that you cannot afford your home any longer and wish to sell, we may be able to help you to secure a short sale payoff or a deed-in lieu of foreclosure agreement with your lender.
Q. What is a Short Sale?
A. If a homeowner wishes to sell, but the home has declined in value so that the loan(s) are more that the sales price, the lender can accept a lower payoff amount. For example, the outstanding loan balance is $400,000, but the homeowner can sell for is $300,000. The lender may accept a lower payoff i.e. $300,000.
Q. Why Would a Lender Agree to a Short Sale?
A. When faced with taking over a property through foreclosure and then finding a buyer for that property, lenders will often look for a less expensive way of cutting their losses. Lenders are most agreeable to a short sale when the borrower brings a ready, willing, and able buyer to the table with a realistic offer. This means the lender saves the cost of foreclosure, the cost of maintaining the property pending marketing and sale, and the cost of paying a real estate broker commission.
Q. What Is a Deed In Lieu?
A. This phrase (short for Deed in Lieu of Foreclosure) refers to the situation where the borrower places the keys on the kitchen table and walks out the door (or in the days of the drive through teller, hands the keys to the teller at the lending institution and drives away).
Q. Why Would a Lender Accept a Deed in Lieu?
A. When the value of the home is about equal to what is owed, a lender may agree to accept the deed in lieu of foreclosing. This saves the lender the cost of foreclosing and evicting the borrower. However, the lender must still pay to maintain the property during marketing and sale, and pay a commission to a real estate broker to sell the property. Thus, if the equity in the property has not dropped too far below the amount owed, a lender may accept a deed in lieu. That said, the current mortgage crisis has not left many homes with enough equity to make a deed in lieu attractive to lenders. Lenders see no advantage in allowing a borrower to just walk away. In the climate of mortgage meltdowns, lenders are not usually willing to accept a deed in lieu.
