The difference between negotiating with your lender alone an experienced attorney is dramatic. To keep your home, it’s essential that your hardship be documented accurately, financials prepared, paperwork is complete, and that the new terms ensure long-term debt relief.
Newport Law will evaluate your current mortgage and the challenges you face. Our loan modification services can help make your home affordable again.
Experts in Loan Modification Law
A loan modification can offer relief. There are many justifications a loan servicer can use to deny your application though. The paperwork is often extensive and confusing. Nearly all mortgage banks use a debt to income ratio to help determine eligibility. Even if you qualify, lack of documentation, an incomplete application, or a poorly written hardship letter can hurt your chances. Newport Law will ensure you are protected.
Lenders prefer that you apply without legal representation because you’re less likely to understand all of your rights. Our attorneys will guide you through the entire process. Upon approval, we will negotiate with your mortgage holder to secure a comfortable and affordable monthly mortgage payment.
Frequently Asked Questions
WHAT IS A LOAN MODIFICATION?
A loan modification is a process in which the bank allows a change in the terms of your existing mortgage. The purpose of a modification is to significantly lower your monthly payments, for either a temporary or permanent period of time.
HOW MUCH CAN I REALLY SAVE BY DOING A LOAN MODIFICATION?
It’s possible to save hundreds or thousands a month. Remember, the length of a loan is typically 30 years. The loan modification that saves you $500- $1000 a month can equal $180,000 + over the life of the loan.
WHO QUALIFIES FOR A HOME LOAN MODIFICATION?
Residents who are struggling to pay their mortgages should look into the option. However, a high probability candidate currently has an adjustable-rate mortgage, a high interest rate, is upside-down on their home or is experiencing any kind of hardship.
WHAT IF MY CREDIT IS BAD?
A loan modification is not based on credit. The banks are trying to make a good loan out of a troubled loan.
WHAT IF MY INCOME IS TOO LOW?
You will need to show the bank that your household can afford the new payment. We will determine this in our Pre-Qualification when you start the process with Newport Law.
WHAT SHOULD I EXPECT THE TERMS TO BE ON MY NEW LOAN?
Banks have rapidly changing guidelines for loan modifications. A bank will typically modify your loan into payments you can continue to pay. This may include a lower interest rate, payment rescheduling, principle reduction, longer terms or any other function that will keep the loan performing.
DOES EVERY BANK DO LOAN MODIFICATIONS?
Almost all banks do. We are in a housing crisis and banks are willing to work with clients to help save their homes.
Mortgage Modification Mediation (MMM) Program Procedures
United States Bankruptcy Court, Northern District of California
You attempt to refinance or modify your home loans in order to obtain a more affordable interest rate or payment and avoid foreclosure. But the bank has recorded its Notice of Default and is proceeding to foreclose. Your application has already been denied or sent back for “more information” several times and you have to keep starting over.A friendly voice on the other end of the phone will assure you that it’s going to be approved and that the foreclosure sale will not proceed. But often this is not true.
This is the scary loop most who attempt loan modifications must face. And by the time the modification is denied (which happens more often than not), you have accumulated another 6-12 months or more of past due payments. And you may only have a few days’ notice prior to the continued foreclosure sale date.
It is at this point that most people contact a bankruptcy attorney to file either a Chapter 13 or Chapter 11 case to stop the foreclosure and use the bankruptcy to catch up on past due payments.But it’s usually too late then to put a case together properly for filing. And there isn’t time to properly analyze the budget to determine whether it is even feasible.
With Chapter 13 You Can Pursue Loan Modifications During Bankruptcy
Now imagine that there was a way you could pursue your loan modification without the worry of foreclosure.Imagine further that you can make payments in the meantime to catch up on your past due amounts and stay current with ongoing payments so the past due amounts don’t increase while your application is pending. And imagine that your lender must accept these payments and terms.
Well, here’s some good news for those of you who have the foresight to read this early in the game:
Filing a Chapter 13 Bankruptcy does not preclude or prevent you from pursuing, or continuing to pursue, a loan modification during the bankruptcy.
Filing a Chapter 13:
- Stops any foreclosure sale dead in its tracks.
- Forces your mortgage company to accept repayment on the past due amounts over up to 60 months.
- And, in the meantime, you can pursue a loan modification to lower your regular monthly payments and , if successful, cure the arrearages early
- Allows you to eliminate unsecured debts such as credit cards and medical bills, sometimes by paying nothing
- You can dismiss the Chapter 13 case at any time.
But wait, it gets better.
When you file bankruptcy your mortgage lender will likely move your file to their bankruptcy department which is frequently staffed by different people than those who were previously rejecting your application.
Thus, you may improve your chances of achieving a loan modification during a Chapter 13 case than you would otherwise.
So why put yourself in the extremely precarious position of losing your home for no reason at all?
Filing Chapter 13 has almost no downside when there’s a foreclosure sale and you want to keep your property and have the means to catch up on the payments over time.
At the very least you should have a consultation with an experienced bankruptcy attorney in your area to determine your best options.