What is a loan modification?
This term has been getting a lot of attention lately and rightfully so. With millions of homeowners stuck in adjustable rate mortgages and no way to refinance out of them, loan modifications may be the only way to assist borrowers who are in danger of losing their home. A loan modification is a permanent change in one or more terms of a borrower’s loan. This allows for the loan to be reinstated, and results in a payment the borrower can afford. It is the most effective tool you can use if you are behind on your mortgage and in midst of a financial hardship to save your home from entering foreclosure. With a loan modification, the mortgage loan is restructured so that it is affordable and can fit into your budget.
What is foreclosure?
Foreclosure is a legal process where a bank or mortgage company can take back your home in order to satisfy your mortgage loan to them. If you fail to make your mortgage payments (including first mortgages, second mortgages, and home equity lines of credit) it can result in a foreclosure. A foreclosure can also be due to non-payment of real estate property taxes.
What is a forbearance
This is used most of the time, when a Notice of Default has been filed. 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. Forbearance plans do not remove a foreclosure action but simply stop it.
What is a Short Sale
If your home is worth less than what you owe on it, you could consider a short sale. With a short sale, Weissman Law Firm could find a buyer for your home and ask your lender to take the proceeds of the sale to help pay off the mortgage, even when those proceeds are less than what is owed. A short sale can have a negative effect on your credit score, but this impact is generally less severe than a foreclosure. A short sale may be an option for you if you are experiencing all of the following:
- a hardship, such as a job loss, divorce or medical emergency
- owe more than your house is worth
- unable to afford your current home loan
- unable to modify your current home loan
Because you would sell your home for less than the loan amount in a short sale, you would not receive any money at the time of the sale. Selling a home in a short sale requires the approval of your lender. In addition, if there are any other loans against your home, like a home equity loan or line of credit, all lenders must agree to the sale.
What is a Deed-in-Lieu?
This option lets you avoid going through the foreclosure process by signing the deed to your home over to your lender. A deed in lieu can negatively affect your credit score, but the impact is generally less severe than a foreclosure. This is a deed instrument in which a mortgagor (i.e., the borrower) conveys all interest in a real property to the mortgagee (i.e., the lender) to satisfy a loan that is in default and avoid foreclosure proceedings. The deed in lieu of foreclosure offers several advantages to both the borrower and the lender. The principal advantage to the borrower is that it immediately releases him from most or all of the personal indebtedness associated with the defaulted loan. The borrower also avoids the public notoriety of a foreclosure proceeding and may receive more generous terms than he would in a formal foreclosure. Advantages to a lender include a reduction in the time and cost of a repossession, and additional advantages if the borrower subsequently files for bankruptcy. In order to be considered a deed in lieu of foreclosure, the indebtedness must be secured by the real estate being transferred
How many payments do I need to miss before I could loose my home?
Usually 90 days past due will trigger the mortgage lender to issue a Notice of Default. Once the NOD is issued, the lender will hire an attorney and begin the Foreclosure process with the court system. This is where the attorney’s fees start piling up and getting really expensive. The foreclosure process has a very strict procedure, which is different in each state. If no prevention foreclosure action is taken, eventually the house will be sold at a public auction
I am receiving letters from my lender regarding missed mortgage payments. What should I do?
DO NOT IGNORE THE LETTERS FROM YOUR LENDER. If you are having problems making your payments, call or e-mail Weissman Law firm as soon as possible, speak to a client advocate and explain your situation. Be prepared to provide them with financial information, such as your monthly income and expenses. Without this information, they may not be able to help.
Are there any alternatives to foreclosure?
Yes. You may qualify for a number of alternatives to the foreclosure process, including a loan modification, in which Weissman Law Firm may be able to arrange an alteration of your current loan based on your financial situation, and possibly provide a reduction of your monthly mortgage payments. Other foreclosure alternatives include a “deed-in-lieu” of foreclosure or short sale. Learn more about the alternatives to Foreclosure.
My Lender has started foreclosure proceedings. What should I do?
Immediately contact Weissman Law Firm DO NOT IGNORE THE LETTERS FROM YOUR LENDER. If you are having problems making your payments, Friendly Financial Services may be able to help you. Explain your situation. Be prepared to provide us with financial information, such as your monthly income and expenses. Without this information, we may not be able to help. Stay in your home for now. You may not qualify for assistance if you abandon your property