Oh no, you checked the mail today and you have received a notice of foreclosure. Basically this means the bank wants to take back your house because for one reason or another you haven’t been able to make your mortgage payments.
Well don’t fret, today we are going to discuss some possible options that can save you from being out on the street and allow you to keep full hold of your real estate. Although you may need to hire attorney it will probably be worth your money. In pricey areas like NYC & LA the use of loan modifications in the legal sector has risen tremendously over the last years.
The first thing to understand is that even though everyone says the big bad bank is evil and WANTS to take your house, this is, in all reality, wrong.
Banks don’t want to foreclose on your property because that just creates more work for them to try to earn or a profit. Most cases don’t break even. They have to pay employees for more time, or even hire more employees which most always cuts into their net profits. They will only foreclose as a last resort.
Before we get into some ways to resolve the issue lets take a look at two of the most common types of foreclosure: judicial and nonjudicial.
With judicial foreclosures those are foreclosures that have been granted by the courts after a lawsuit has been filed against you by the lender. It is also necessary when the mortgage contract does not have the “Power to Sale” clause.
With a non-judicial foreclosure the lender will normally give you 120 days to settle the past due balance on the home before they proceed with the auction. One thing to remember though is under a non-judicial foreclosure you have no rights of redemption, this basically means that you can no longer pay the balance after the end of the settlement period.
Now lets go ahead and discuss a few of the options available to you:
More often than not, a lender will allow you to opt for a forbearance which will usually allow you to temporarily delay payments on your property for a short period of time,it can take up to 6 months in some cases. Now this can be extremely useful because it can allow you to save up some money and settle most, if not all, of the past due amount before the end of the period.
Another option you have is a repayment plan also known as a mortgage/loan modification. with this you have 2 options.
First: you can opt to add the past due amount to your existing loan and finance it over a long term period. Second: if you need to have the payments reduced, you can also extend the period of the loan in addition to adding the past due amount.
This is the most common option that people consider and banks are more than willing to agree to a loan modification, since it is beneficial to both parties.
One important thing to remember though, is to always do your research before you make any final decisions. Some creditors may try to get you to agree to an on the spot deal that is not always beneficial, even if it’s a loan modification.
Tips For Real Estate Loan Modification
When it comes to anything involving loan modification it can be a frustrating and confusing process for homeowners. If you are at the point where you feel that you need to contact your lender regarding your loan to try and work something out to avoid a foreclosure then you are going to need some sound advice. So lets take a look at what a loan modification is and some simple steps that can help make the process much easier.
What exactly is a loan modification?
A loan modification is a change in at least one of the terms on a borrower’s home or real estate loan. It can also allow the loan to be reinstated and will result in a lower mortgage payment that the homeowner can more easily afford.
Are late charges included in a loan modification?
There are federal laws in place that require banks to waive any admin charges, penalties, and late fees, and other penalty related payments when they are offering a loan workout. But how can banks afford this? The federal government has set aside over $75 billion to help lenders and providers who are offering loan workouts for their clients. In addition to the $75 billion, banks also receive other incentives to help any qualified borrowers.
On the homeowner’s side–after they have completed a loan modification–they can be eligible to receive up to $5000 in credit on their outstanding loan balance.
There are a couple requirements to qualify for a loan modification. The biggest factor that a lender will look at is whether or not you are able to pay the new modified payment once it is in place. To provide proof that you can, you will need things like a proof of income, and/or a detailed financial statement that includes all of your expenses and income.
Another thing to consider is “acceptable hardship”. So what exactly is “acceptable hardship”? It’s a set of circumstances that have caused you to fall behind on the loan. A good example of acceptable hardship is job loss, death of a family member, job relocation, illness, and military service. In order to qualify for an acceptable hardship you would need to write a letter detailing why you should be eligible and include it in your loan modification application.
One more thing to remember is that if you file for a loan modification and it is approved, it will stop the foreclosure process.
There are quite a few ways you can research the loan modification process; you can use the web; you can talk to a loan specialist; or you can seek legal assistance. When seeking legal assistance, the real estate loan modification lawyer can actually take care of submitting all the paperwork and working out a fair deal with the bank that is in your favor.
The last thing to remember is that if you take the time to research and make sure you have an understanding of the process you will be able to get through everything with the least amount of stress.
Real Estate Lawyer Queens Alishaev Esq 100-15 Queens Boulevard #203 Forest Hills, NY 11375 Phone: (718) 459-2030