Mortgage loan modifications have recently increased in popularity as mortgage companies have become more willing to work out payment reductions for those overburdened by their monthly payments. Rather than see borrowers face foreclosure or abandon their homes, lenders are inclined to offer a mortgage loan modification. The new payment is calculated a variety of ways. Mortgage companies may use their own guidelines and/or government programs such as HAMP, to evaluate and determine your ability to pay. Remember . . . Your mortgage company does not have to modify your loan.
Working with lenders on a mortgage loan modification can be complicated and time consuming. More importantly, if you are behind on your mortgage, each month that passes during the loan modification process may further damage your credit, adding late fees, and ultimately pushing you closer to foreclosure if not successful. In addition, mortgage loan modifications are often temporary, meaning that you are under a trial period with a lower or sometimes higher payment for a temporary period. After this period has ended, you may have to re-apply. This can go on for months and even up to a year or two, before you know what your permanent loan modification payment will be. In some cases, if you knew the final modification payment, you may have agreed to the trial payments.
If you are considering a mortgage loan modification, whether behind or current on your loan, our bankruptcy attorneys can help you evaluate your options with your lender.
Often the need for a loan modification stems from being overburdened with other debt, meaning it is not only difficult to pay your mortgage, but you are also paying credit card and other debt making the payment even more difficult. Someone at this crossroad may choose to try and modify their mortgage loan AND file a Chapter 7 to eliminate their other debt. If you are not happy with the mortgage modification, then the Chapter 7 can provide an opportunity to walk away from the property without owing the balance as well as eliminating other debt.
Walking away from your home can be extremely difficult, but getting a fresh start, rebuilding your credit, and owning a home with a reasonable payment in the future, is a motivating goal of Chapter 7 bankruptcy for many clients.
Traditional Chapter 13 bankruptcy offers a plan to catch up on past due mortgage loan payments and avoid foreclosure, and it continues to successfully do just that. But one size doesn’t fit all, especially when income has changed or houses are not worth what they once were. How can you catch up on your home if you can’t afford your mortgage payment? Chapter 13 bankruptcy now offers an alternative option in our district, Mortgage Modification Mediation through the bankruptcy court. The two biggest benefits of modification through the Chapter 13 process are: 1) a judge signs an Order specifying the guidelines for your mortgage company to engage in mediation, including enforceable timelines and procedures; and, 2) you are protected by bankruptcy during this process. Clients are finding success in this program not only with HAMP loans, but with other types of modification programs offered by their mortgage companies. Especially when previous attempts to modify your loan have failed, Mortgage Modification Mediation through a Chapter 13 bankruptcy shows a homeowner means business. This is also great way to take advantage of the bankruptcy court's power to strip second and third mortgages. Call the Law Offices of Keith D. Collier in Jacksonville for your FREE consultation to discuss a Chapter 13 bankruptcy with a Mortgage Modification Mediation.