The Role of Mortgage Modification in Preventing Foreclosure
If you are dealing with overwhelming debt or financial instability, it can be challenging to make on-time payments on your mortgage. When you miss payments and fall behind on your mortgage, the bank can often pursue foreclosure in an attempt to seize your home and recoup the outstanding balance on your loan.
When you receive a foreclosure notice, it's common to believe your options are limited. However, there are steps you can take to improve your financial standing and prevent foreclosure, such as modifying your existing mortgage.
Located in Hackensack, New Jersey, The Law Office of Marc G. Alster is experienced in helping those who are struggling financially modify their mortgage to prevent foreclosure proceedings from continuing. If you believe a mortgage modification could be right for you, reach out today to schedule a consultation.
What Is Mortgage Modification?
Mortgage modification refers to restructuring your home or property loan when you are experiencing considerable financial challenges. It is essentially a change in the terms of your loan and a common form of loss mitigation, a process in which your mortgage lender can work with you to avoid foreclosure and minimize potential losses.
Mortgage modifications are designed to help you make your monthly payments more affordable and avoid foreclosure proceedings when you have fallen behind in your payments. This could include reducing the interest rate on your loan, reducing the principal balance, or extending the repayment period.
How Can Mortgage Modification Help Prevent Foreclosure?
Modifying your mortgage is a significant step toward improving your financial stability and avoiding foreclosure on your home. Depending on your financial situation and the terms of your loan, the primary ways modifying your mortgage could help include:
Reduces your monthly payments: Modifying your mortgage could lower the amount you have to pay each month. This could be done by switching from an adjustable-rate mortgage to a fixed-rate mortgage, by lowering your interest rate or by extending your loan term.
Capitalizes missed payments: In some cases, your missed payments and fees may be added to your loan's principal balance. This could eliminate the mortgage default that initially triggered the foreclosure against your property.
Temporarily halts immediate foreclosure actions: By filing a timely application for a modification, mortgage lenders are typically required to halt foreclosure proceedings while your application is being reviewed. To be considered timely, your modification application should be filed as early as possible after you receive your mortgage lender's default notice and more if formal foreclosure proceedings have started.
Modifying a mortgage can potentially save your home, but it can also lead to additional complications if you aren't careful. If your application for a modification is approved, it's important to understand how the modification will affect your monthly payments and what you will owe on your loan, both in the short and long term.
Steps to Modify Your Mortgage Effectively
If you decide to pursue a mortgage modification, it's important to work with an experienced attorney who understands these cases and can provide the tailored guidance you need to successfully submit an application.
Your attorney will be able to guide you through the following steps and help you make informed decisions along the way:
Determine your eligibility: If you have missed mortgage payments or are more than 90 days in arrears, your attorney can help you gather information about your income, expenses to your mortgage lender and/or servicer, and help you determine whether you qualify for modification or whether bankruptcy would be a more suitable option.
File a modification application: You and your attorney will need to complete your application for a modification together. Since your house is on the line, it's necessary for your application to be as complete and error-free as possible and to highlight why you were unable to pay the current mortgage amount and why you would be able to remain current if your mortgage modification application were to be granted.
Await a decision: Once you have filed your application, you will need to wait for a response. If your servicer requests additional information, you need to promptly supply it. Your attorney will typically act as your advocate and communicate with your servicer on your behalf. Remember, reviewing your application could take some time, so will likely need to be patient.
The success of your application will largely depend on the strength of the information you provide. Missing information or incomplete paperwork will often result in your application being denied.
What to Do If Your Mortgage Modification Is Denied
If your mortgage modification request is denied, don't panic. You have the right to appeal the decision. Your servicer is typically required to inform you why your application was denied, and your attorney can likely be able to help you file the proper documents for an appeal, if you haven't retained the attorney directly to file the appeal for you.
According to the Consumer Financial Protection Bureau under Subpart C - Mortgage Servicing 1024.41(d), you have 14 days to submit an appeal following a denial of modification. If you were denied due to missing paperwork or incomplete information, be sure to submit an updated completed application.
Contact an Experienced Mortgage Modification Attorney Serving New Jersey and New York
Overwhelming debt and financial challenges can significantly impact your ability to make on-time mortgage payments. If you are facing potential foreclosure on your home due to missed payments, a mortgage modification could provide relief by getting your mortgage current and restructuring monthly mortgage payment.
At The Law Offices of Marc G. Alster, Attorney Alster is skilled in helping clients apply for mortgage modifications to prevent foreclosure and improve their financial standing. Reach out today to schedule a consultation and explore your options.
Located in Hackensack, New Jersey, the firm serves clients throughout New Jersey, including Passaic County, Bergen County, Hudson County, and Essex County, as well as in Southern New York, including Rockland County, Putnam County, Orange County, Queens County, and Bronx County.