One of the most common ways to legally stop foreclosure is by getting a loan modification. If you’re asking, can they foreclose during loan modification, the general answer is no. As long as you submit a completed application at least 37 days before your scheduled sheriff’s sale, your lender cannot foreclose on your property while your application is under review.
That said, using loan modification to stop foreclosure is not always straightforward. If your application is incomplete, submitted late, denied, or mishandled by the lender, your lender may be allowed to continue with the foreclosure.
At Denbeaux & Denbeaux Law, we have extensive experience helping New Jersey homeowners navigate the foreclosure process. Contact us today for a free consultation to see if loan modification is the right option for you.
What is a Loan Modification?
A loan modification is an agreement with your mortgage lender to change the terms of your loan. This can help if you’re struggling to make payments, as it makes it easier for you to make on-time payments. This could involve lowering your interest rate, spreading out missed payments, or extending the length of your loan to reduce your monthly payment amount.
There are many mortgage modification foreclosure programs available. What is available to you will vary based on the lender you are working with and your unique situation.
If you are interested in using a loan modification foreclosure strategy, apply for a loan modification as soon as possible. Timing is crucial if you’re facing foreclosure and considering a loan modification to prevent it.
Can They Foreclose During Loan Modification?
Loan modification can help you avoid foreclosure by making your mortgage payments more affordable. If you are already in the foreclosure process and are asking, “Does loan modification stop foreclosure?” or “Can a loan modification stop foreclosure?” the answer depends on where you are in the foreclosure timeline.
If you have submitted a complete loan modification application at least 37 days before your scheduled sheriff’s sale, federal guidelines prevent your lender from moving forward with foreclosure while your application is under review. These protections are designed to prevent dual tracking, a situation where a lender pursues foreclosure while also considering your loan modification application.
However, if your application is incomplete, denied, or submitted too close to the sale date, the federal protections may not apply, and the lender may be allowed to continue with the foreclosure process.
While loan modification can be a great option to stop foreclosure, the process can get complicated if there are issues with your application timing or documentation. Working with an experienced foreclosure defense attorney can help make sure your application is filled out and submitted correctly, increasing your chances of approval and stopping the foreclosure.
Knowing Your Rights as a Homeowner
As a homeowner facing foreclosure, it is important to know all of your homeowner rights, especially as they relate to loan modification and foreclosure. Mistakes made by lenders are more common than you think, especially in the loan modification process. These mistakes may violate your rights as a homeowner and could lead to wrongful foreclosure.
Common mortgage servicer violations in loan modifications to look out for include, but are not limited to:
- Not reviewing the timeline in a timely manner
- Dual tracking, or foreclosing during a loan modification
- Asking homeowners to resubmit documents
- Not honoring a modification agreement after a servicer transfer
- Telling homeowners they must be in default to qualify for a loan modification
- Miscalculations in the loan’s principal balance, property value, and the homeowner’s income that lead to application denial
- Failing to convert a trial modification to a permanent modification
Any of these can lead to a wrongful foreclosure that violates your rights. It can be hard to know when your lender is breaking the law on your own. Working with an experienced foreclosure attorney who can investigate your foreclosure, especially if you were a victim of dual tracking, may be able to stop the foreclosure entirely if any of these violations occurred.
Get a Free Loan Modification Consultation
Handing a loan modification on your own can be overwhelming, especially for someone who isn’t familiar with home loan laws. And while using a foreclosure loan modification strategy is a common option to protect your home, it is not the only option to avoid foreclosure.
Joshua Denbeaux is a loan modification attorney with over a decade of experience helping clients navigate home loan modifications and the foreclosure process.
Contact Denbeaux & Denbeaux Law for a free consultation to find out if loan modification is right for you.
