Can I Still Stop Foreclosure If I’ve Defaulted On A Loan Modification?

Homeowners always have the right to fight against foreclosure, and defaulting on a loan modification is no exception. If you have defaulted on a loan modification, you still have the right to fight against foreclosure on your home.

There are a number of reasons why homeowners default on a loan modification, such as loss of employment, increased interest rates, death of a family member, and many more challenging situations. Even if you have defaulted on one or more loan modifications, you still have the right to fight against foreclosure in this situation and have options on what can be done to save your home. 

With the help of an experienced foreclosure defense attorney, you may have a chance to delay or avoid foreclosure by applying for another loan modification, forbearance, selling your home in a sheriff’s sale, or as a last resort, bankruptcy. If the mortgage servicer has made errors during the process, you also have the right to protect your homeowner’s rights through RESPA.

Can You Get A Second Loan Modification?

While no rule or law limits the number of loan modifications a homeowner can get, it depends on whether or not you get approved by your mortgage lender. Technically, you can receive unlimited loan modifications if your lender is willing to work with you.

Even if your mortgage lender has modification programs available, you may not qualify for them, depending on your situation. A mortgage lender also has the right to refuse a new modification if multiple loan modifications have been defaulted on. 

If you fear losing your home because you didn’t get approved for another loan modification, you still have other options available to delay or stop foreclosure.

What Are Options To Stop Foreclosure After Defaulting On A Loan Modification?

You have other options to stop foreclosure after you’ve defaulted on a loan modification. In many cases, bankruptcy should be the last resort because it can seriously damage your credit as well as lose the equity you’ve built in your home. An experienced attorney can help you go through all your options to see which one will be the best fit for you in your current situation. 

Forbearance 

Traditional mortgage forbearance is an agreement allowing homeowners some short-term relief from their mortgage payments. During the forbearance period, mortgage payments are either reduced or suspended to give homeowners a chance to avoid defaulting on the loan modification and entering foreclosure.

Even if your payments are suspended during forbearance, you are still responsible for getting up-to-date on your mortgage loan. If you have an existing loan modification, you may not be eligible for forbearance, depending on the terms of your modification. 

If you’re considering forbearance because you believe you will default on your home soon after a loan modification, contacting an experienced foreclosure lawyer can help you learn about your options to prevent losing your home before you default.

Short Sale

A short sale is when a homeowner chooses to sell their house for under what is owed on the mortgage. All sale proceeds will go to the mortgage lender, and while there are times when the lender will forgive the difference between what the house is sold for and how much is owed, they can still get a deficiency judgment on you. A deficiency judgment requires you to pay that difference. 

Even if your home is already under foreclosure, selling your home at the right price and within the right time frame could help pay off your mortgage loan and stop the foreclosure. However, you’ll be left without a place to live very quickly. If you instead decide to fight the foreclosure, you may be able to stay in your home for up to 21 months as part of the foreclosure process.

Bankruptcy 

Filing for bankruptcy is a legal process to help people who can not pay their debt to get a fresh start. Don’t trust everything you read on the internet. Bankruptcy may sound like a nice option, but it can have significant consequences like damaging your credit score or losing all your assets.

Depending on your financial situation, bankruptcy may result in loss of equity in your home, leaving you with nothing to show for the mortgage payments and downpayment you made on your home. Bankruptcy is also not a forgiving process, so if you experience financial hardship again in the future, you may lose everything despite working hard to keep it.

Contact A Foreclosure Attorney Today For All Your Foreclosure Questions

It can be challenging for a homeowner to stop the foreclosure process without guidance. Having an experienced and trusted foreclosure defense lawyer on your side may give you the confidence you need. A foreclosure defense lawyer may be able to help you enter forbearance, join a pre-foreclosure program, pursue an additional mortgage modification, or find another option that would best suit your financial situation. 

We understand how confusing the foreclosure process can be, especially with the added fear of losing your home. You may not know the best course of action for you. Joshua Denbeaux is an experienced foreclosure attorney who has helped represent over 2,000 homeowners in New Jersey. 

Contact Joshua Denbeaux today for a free initial consultation and learn more about how he may be able to help you save your home.

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