What is a Mortgage Modification?

A mortgage modification is basically an adjustment to the monthly payment, interest rate, term or outstanding principal of the mortgage.  This is a great way to make your home affordable and help prevent foreclosure from taking place.
 

Can I Obtain a Mortgage Modification Without an Attorney?

The problem with mortgage modifications is it can be extremely difficult to get the banks to cooperate with you. Even just to find the right department where you would apply for a modification can be a challenge in and of itself. Having an attorney to represent you through this process and help negotiate with your lender can alleviate much of the headache that comes with attempting to do it yourself.  Also, having an attorney will help ensure your interests are being well cared for and your legal rights are being protected.
 

How Can My Mortgage Change with a Mortgage Modification?

There are many different ways a mortgage can be modified. Clearly the modification should be realistic and should provide reasonable terms for both you and your lender. Here are just a few ways a mortgage could be modified:

• Reduction in interest rate
• Change from a floating to a fixed rate
• Change the way a floating rate is computed
• Reduction in principal
• Reduction in late fees or other penalties
• Lengthening of the loan term
• Capping the monthly payment to a percentage of household income
• Mortgage forbearance program
   

Am I Eligible to Apply For a Mortgage Modification?

If you are current with your mortgage payments, late, in default, in bankruptcy, or in foreclosure you can still apply for a mortgage modification. However, keep in mind that applying for a mortgage modification does not legally prevent a foreclosure from being processed. Make sure to get all agreements in writing.
 

Why Would My Lender Agree to a Mortgage Modification?

Often times the lender would prefer to work out an affordable payment plan with you than to forego the expensive process of foreclosing on your home. The lender might be motivated to offer you better mortgage terms because of the expectation that you would be able to afford a lower payment, and that a performing loan (i.e. one in which payments are current) will be more valuable ultimately than the proceeds obtained from a foreclosure sale.
 

What If My Lender Denies Me a Mortgage Modification?

If keeping your home is what you intend to do, having your mortgage modification proposal denied by your lender is no reason to give up. You still have options. Filing either a Chapter 7 Bankruptcy or Chapter 13 Bankruptcy can help reorganize your debts and provide you with the extra finances needed to continue paying your mortgage. We understand your home is precious to you and if your goal is to stay in it, we want to help you do that. Please don't hesitate to contact us for a free initial consultation to help ensure you take the proper steps to keep your home.