Should I Ask for a Loan Modification If I Am Behind on My Mortgage?

 Posted on September 17, 2020 in Mortgage

Have you missed a few mortgage payments because of COVID-19 or for any other reason? If so, you might be inching ever closer to defaulting on your loan, which means that foreclosure could soon become a possibility. While many lenders—including most federally sponsored lending programs—put a moratorium on foreclosures during the COVID-19 health crisis, these moratoriums will soon be coming to an end. With this in mind, you will need to address any payments that you might have skipped, regardless of the reasons.

The good news is that you will almost certainly have options that can help you get your loan back in good standing so that you can keep your home. One of the most common of these options is a loan modification, and an experienced Libertyville attorney can help you with your application.

Be Proactive

Put simply, a loan modification is an amendment to the conditions and terms set in your mortgage loan agreement. The purpose of the modification is to allow you to catch up and bring your mortgage current. Loan modifications can take many forms. For example, you might qualify for a loan extension that reduces your monthly payment, an adjustment to your interest rate, or an approved capitalization of the payments you have missed. The different types of loan modifications all share at least one commonality: a modification will not be granted unless you ask for one.

Applying for a loan modification sounds simple enough, but completing the application properly and getting it to the right people at the lending institution can be challenging. The representatives who take your calls are often not very clear regarding what your application should include or if the lender has received all of the paperwork that you might have sent. The best way to go about the application process is to obtain the requirements in writing, submitting the application and supporting documentation to the lender—by fax, email, and postal mail—and then following up to make sure everything was received.

Propose a Modification

It is not uncommon for a borrower who is facing foreclosure to call the lender and ask for assistance—but not without having any ideas or plans about how to catch up the missed payments. If you seriously want to modify your mortgage loan, it is a good idea to talk with your spouse (if you have one) and your lawyer to develop a modification proposal that you know you can keep up with. Your plan could be one of the basic modification types, or it could contain elements of several different types. In your proposal, you should lay out your net present value (NPV), your debt-to-income (DTI) ratio, and other related indicators that demonstrate your ability to meet the terms of your proposed modification. By coming up with your own plan, you can show your lender that you are committed to rehabilitating your loan as quickly as possible.

Contact a Lake County Foreclosure Prevention Attorney

If you are behind on your mortgage and you would like to know more about applying for a loan modification through your lender, we can help. Call 847-549-0000 to schedule a free consultation with one of the experienced Libertyville loan modification lawyers at Newland & Newland, L.L.P. today. We will work closely with you and provide the assistance you need to keep you and your family in your home.

Sources:

https://www.thebalance.com/loan-modifications-315514

https://www.bankrate.com/finance/mortgages/tips-for-getting-a-mortgage-loan-modification-1.aspx