The next letter in the Bankruptcy Alphabet, M stands for Mortgage Modification. A Modification is a way that a mortgage company can voluntarily change your mortgage terms, such as the interest rate, length of time to repay the loan, balance, and repayment terms. Sounds great in theory. But, in reality only a small percentage of loans are getting modified, or changed at all. That is because the banks’ participation is voluntary, and, it is totally up to each lender as to whether they approve your loan for a modification. There is no magic thing you can do, or person you can talk to. The modification process is either done through the bank or through the HAMP program (Home Affordable Modification Program).
Here is how the process works: You call your lender and request a loan modification application. The lender sends the package to you to fill out. You have to submit paperwork such as pay stubs and tax returns to them. Be sure you get a return receipt if you mail the documents. If you fax them, print a fax confirmation. The lenders often say they lose the documents. Once the lender gets the documents, you have to wait to see if they approve you for a “trial period”. If you get a trial period, the lender sometimes reduces the payment, and has you make payments for at least 3 months. Then, at some point after you make the trial payments, the lender lets you know if you are approved. Some people have paid for 6 months or more. After the trial period, you have to submit more documents to the lender. Then, you might get approved for a “permanent” modification. At that point, the lender will send you a package for you to sign. They would then record the final documents with your county recorder.
In the whole process, you do not typically need an attorney, or other agency to do this work. In fact, if someone guarantees that they will modify your loan, it is a scam. Nobody can guarantee a modification on a home loan.
Do you need to be behind in your payments to get a modification? No! You can still qualify for a modification even if you are current. In fact, being current in your payments gives you many more options, and, if you fall behind in your payments, and don’t get a modification, you might have a hard time catching up in the payments and the mortgage company could foreclose on your home!
Does the loan modification process stop foreclosure? No! The lender can promise the world, and say what could happen. But, in the meantime, they don’t have to stop any foreclosure that is going on in court. So, watch out.
What should you do if you are trying for a modification, but falling behind in your payments? Or were denied for a modification? Call an experienced bankruptcy attorney. You need to have all of your options available, because if you make a wrong move, you could very easily lose your house.
Call us if you have questions, or want to set up a free appointment.
Daniel J. Winter
LAW OFFICES OF DANIEL J. WINTER
53W. Jackson Boulevard
For other articles on the Bankruptcy Alphabet:
Latest posts by Daniel J. Winter, Esq. (Posts)
- Can missed mortgage payments be put into a Chapter 7 as a way to catch up with a mortgage? - June 19, 2013
- Bankruptcy Lawyer Reviews- Why are they Important? - June 1, 2013
- Student Loan Interest Rates – a Ticking Time Bomb - May 27, 2013