If you have had trouble paying your mortgage each month and/or your home is at risk for foreclosure, you may have been told to look into mortgage modification. In fact, in 2012, five of the country's biggest banks came to a settlement agreement with the government so that more homeowners could gain access to loan modifications if they were experiencing financial hardship.
How Loan Modifications Work
When you apply for a loan modification, you must send in a bevy of financial documents. Your mortgage bank is looking to calculate the percentage that your monthly mortgage and insurance payment takes in relation to your monthly gross income. This is commonly known as your "debt to income" ratio. If your lender sees that your "debt to income" ratio is too high for you to make your monthly payments without financial hardship, they will make you a modification offer, which you as the homeowner may either accept or deny. In order to make your payments more affordable, your mortgage lender may lower your interest rate for a certain amount of years, forgive certain loan amounts, and/or extend the term of your loan.
Unforeseen Consequences
However, for many people, loan modification was not the catch-all solution that they hoped for. Modifications require a lot of time and paperwork, with banks often dragging their feet during the process. Additionally, in some circumstances, certain modifications can actually negatively effect you in the long run. The negative aspects of loan modifications can be seen in this statistic given by the Comptroller of the Currency, John Dugan, who asserted that in 2008 over 53% of loan modifications in the United States resulted in another default after six months.
How to Get Help
If you are considering a loan modification, make sure you seek legal counsel before you do so! It is incredible how many people make the mistake of signing an incredibly important legal document without first consulting an attorney. A good lawyer will be experienced in loan modifications, having assisted clients with them many times before, and can correctly gauge whether or not the modification is the best for your unique financial future.
If you are a homeowner who was taken advantage of by unscrupulous mortgage lender, you still have options. There are ways to stop or delay the foreclosure sale of your home. If you find yourself in this situation, it is crucial that you consult an attorney. At the height of the housing boom, mortgage notes and other financial documents were passing through banks at a never before experienced speed. This resulted in a high amount of clerical error and sometimes illegal financial practices. An attorney can closely review your case to check for substandard practices that you could potentially change the outcome of your foreclosure.
If you are struggling with a loan modification, feel free to contact me at my office at (718) 317-5007.
- Kevin McKernan
No comments:
Post a Comment
Tell us what you think!