Are you a homeowner struggling to keep up with your mortgage payments and worried you might be facing foreclosure? The good news is you may have resources available to help you delay or stop foreclosure altogether with a loan modification.
Before you choose your course of action for foreclosure avoidance, it’s important that you thoroughly consider all of your options. Every option has advantages and disadvantages that may vary depending on the details of your particular case. A loan modification is one option to stop foreclosure. Loan modifications offer a lot of benefits, with few disadvantages in most cases.
An experienced foreclosure attorney can help you review all of your available options and decide the best option based on your situation and desired outcome.
At Denbeaux & Denbeaux Law, we have experience with the foreclosure process. Our attorneys assist homeowners trying to obtain a loan modification by communicating with the mortgage company and defending your rights as a homeowner. Contact us today to schedule a free consultation to discuss your situation.
What Is A Loan Modification and How Can They Stop Foreclosure?
A loan modification is a modification of your original loan that you owe to your mortgage lender. If you are struggling to make your mortgage payments, a loan modification can stop foreclosure because it changes the term of your loan to make it more manageable for you.
Getting a loan modification can alter a number of different aspects of your original mortgage. Depending on your situation and your mortgage company, they may offer different types of changes. Common loan modifications are:
- Reduced monthly payments
- Modified loan type
- Changed interest rate
- Reduced principal
- Changed loan term
- Deferred payments
- Other loan adjustments
A loan modification changes the terms of your mortgage so that you can make your payments on time and in full. If you are facing foreclosure and struggling to make your mortgage payments, a loan modification can help you avoid foreclosure by making your mortgage payments more affordable. Once you’ve created a loan modification, staying on top of your mortgage payments will help you avoid foreclosure.
If your mortgage company is working with you on a loan modification, they must stop any steps involved in pursuing foreclosure. Mortgage companies can’t foreclose during a loan modification application or negotiation.
Advantages and Disadvantages of Loan Modifications
Before considering a loan modification to avoid foreclosure, it’s important that you consider all of the potential advantages and disadvantages to figure out if getting a loan mod is a good idea for you.
Advantages
A major advantage of a loan modification is that it may allow you to delay or stop foreclosure and stay in your home. Loan modifications present a great option for people who have fallen behind on mortgage payments because there is a possibility that you may be able to settle any payment delinquencies as part of your modification agreement.
When comparing a loan modification and foreclosure, loan modifications typically have a smaller negative impact on credit ratings than a foreclosure would. A loan modification may have some impact on credit ratings because it involves your credit. Still, it is usually smaller or lasts for a shorter period of time than a foreclosure would.
Disadvantages
Depending on where you are in the term of your original loan and how your loan is modified, getting a loan modification could mean that you would end up paying more over time to repay your loan.
A loan modification could increase the amount of your loan, which might mean that the total you owe on your loan is more than your home is worth. If you plan to stay in your home and pay off your loan, this might not mean much, but it could be an issue if you try to sell your home down the road. A loan larger than the value of your home could make it hard for you to pay off your loan through a sale.
Modifying your loan may mean that you need to pay extra fees as part of the loan modification process, or you could incur a tax liability. Additionally, your lender could report your loan modification as a debt settlement, which could negatively impact your credit.
Speaking with an experienced attorney can help you decide if using a loan modification to avoid foreclosure is the best strategy for your particular situation and whether the pros outweigh the cons.
How to Get a Loan Modification
Working with an attorney may be a good idea if you are considering applying for a loan modification. An experienced attorney can help you negotiate with your mortgage company and protect you and your homeowner’s rights through the process.
If you pursue a loan modification, the first step typically involves identifying and contacting your mortgage servicer to find out loan modification requirements, which may be different than who you originally got your loan from. It’s common for your mortgage servicer to change throughout the term of the loan, and with that comes the potential of mortgage servicer errors. With the help of a loan mod attorney, you may be able to stop or delay foreclosure, depending on the errors made by your servicer.
An attorney who is familiar with the loan modification process can also help you with your application. It’s very important that you have all of the proper documents before applying and that your application is filled out correctly. If not, you risk being denied a loan modification.
Talk to a Loan Modification Attorney
There are a lot of options to prevent or avoid foreclosure that are unique to each case. Loan modifications can help homeowners avoid or stop foreclosure.
Without knowing the details of your situation, it’s hard to say whether or not a loan modification is a good idea for you. Before you commit to a single course of action, it’s important that you explore all of your options.
Working with an attorney can help you make sure that you’re exploring every possible option and that your rights as a homeowner are protected throughout the process.
If you are interested in learning more about your options to protect your home from foreclosure, contact Joshua Denbeaux today.
