What Is A Mortgage Loan Modification & How Does It Work?

One of the best ways for homeowners to save their home from foreclosure is by getting a mortgage loan modification. With the end of the CARES Act, foreclosures are estimated to be in the millions and the CFPB is doing everything they can to prevent a repeat of the 2008 Great Recession. Lenders and servicers will now be required to put forth reasonable diligence to help homeowners find a modification for their home loans. 

Whether you are currently going through foreclosure or aren’t sure you’ll be able to stay up-to-date on mortgage payments, you may be able to apply for a loan modification and avoid or stop foreclosure. 

Denbeaux & Denbeaux Law has loan modification attorneys who are ready to answer your questions and guide you through the process of loan modifications and foreclosure. Aren’t sure what a loan modification is? Contact Joshua Denbeaux today for a free consultation and keep reading to find out how a loan modification works and how it may be able to help you keep your home.

What Is A Mortgage Loan Modification?

A home loan modification allows you to modify the original loan that you owe to your mortgage lender. This could mean reducing the interest rate, splitting the payments into smaller amounts, or extending the loan to reduce payment amounts.  

Loan modifications can be denied by lenders but that has become increasingly less likely with the help of the new CFPB rules requiring lenders and servicers to put forth their due diligence in order to help homeowners avoid foreclosure.

If you decide to go the route of trying to get a mortgage loan modification, be aware that banks are notorious for trying all kinds of games to maximize their investments by denying homeowners loan modifications. While regulations have gotten a lot better for homeowners since the Great Recession, banks and lenders sometimes violate homeowner rights. As well, there are scam loan modification companies that try to take advantage of homeowners who are desperate.  

Maybe your homeowner rights have already been violated in a foreclosure. If that happens, you may be able to use violations to your advantage in loan modifications and foreclosure proceedings. That’s why you should seriously consider hiring a loan modification attorney that can help to protect your rights as a homeowner going through foreclosure or if you’re trying to get a loan modification. 

When Should You Get A Loan Modification?

Whether you’re being foreclosed on or are worried you’re going to get foreclosed on soon, you may be wondering when you should get a modification for your loan. In most cases, the earlier in the process you get a mortgage loan modification, the better off you’ll be to stop the foreclosure. But don’t let that scare you if you’re further along in the process.

Despite where you are in the foreclosure process, you can still try to get a loan modification as long as your home has not been sold. Here are some other times when homeowners should pursue a loan modification:

1. When you can’t stay up-to-date on your mortgage payments

If you are currently struggling with paying your monthly mortgage payments, whether you are in foreclosure or not, getting a loan modification can help you make payments more manageable. Reducing your payment amounts could help you stop the foreclosure or avoid the foreclosure process altogether if you haven’t already received a foreclosure notice. Typically mortgage servicers will start foreclosure proceedings after you’ve missed three mortgage payments.

2. When you receive a Notice of Intent to foreclose on your home

If you receive a Foreclosure Complaint or Notice of Intent (NOI) to foreclose on your home, the first thing you should do is talk to an attorney. An attorney can help you answer the NOI and determine what loan modification options are available to you as well as investigate if there have been any violations of your homeowner rights. The earlier you can get a loan modification after receiving the NOI, the better chance you’ll have at stopping the foreclosure.

3. When you’re facing an imminent default judgement

A default judgment is a judgment granted by a judge that allows your lender or servicer to take your home without giving you the option to fight against the foreclosure. Default judgments can happen quickly when you don’t answer the initial Complaint or when something happens that may be preventing you from paying your mortgage on time like losing your job, contracting an illness, death of a family member, etc. If you are facing a default judgement but haven’t received one yet, you still have the opportunity to pursue a loan modification for your mortgage and possibly save your home.

How Do You Get A Mortgage Loan Modification?

The first thing you need to figure out during the loan modification process is who the loan servicer is for your home loan. The loan servicer is the company you pay monthly payments to and may or may not be the same company you initially got your home loan from. A lot of lenders use a separate company to service the loans so it’s important to figure out who the servicer actually is and contact the right people to prevent precious time from being wasted.

The next thing that most homeowners do is submit an application to their servicer stating a desire for a loan modification and why. The application typically states your financial hardship and what occurred that led to you applying for a loan modification. The servicer will likely request additional information from you including bank statements, paystubs, tax statements, etc., to confirm your reasons for applying.

Working with a loan modification attorney can help you figure out how to apply for a loan modification and prove to the servicer that you need a loan modification. An experienced attorney understands the process and requirements that you’ll need to meet in order to be approved. They also know how to prevent mistakes from being made that could impact the approval of your loan modification as well as how to protect your homeowner rights through the loan modification process.

Get A Loan Modification With Help From Our Loan Modification Lawyers

Millions of foreclosures are estimated to occur throughout the remainder of this year and next. Now more than ever, lenders will be required to help qualified homeowners modify their loans and make foreclosure a last resort. However, it’s still likely servicers may make the process difficult and homeowners may get caught up in the process. With so many applications for loan modifications, it’s also likely there may be violations of homeowner rights throughout the process.

Make sure you have the help you need to guide you through the loan modification process by contacting attorney Joshua Denbeaux at Denbeaux & Denbeaux Law.

Reach out to set up a free consultation today and find out how an experienced loan modification attorney like Joshua Denbeaux may be able to help you get a loan modification to save your home from foreclosure.

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