First, let’s define exactly what a mortgage modification is. It is a modification to an existing loan that was made by a lender. The reason it needs to be modified is that the borrower is experiencing difficulty in being able to repay the loan. Its basic function is to prevent a foreclosure on your home.
Mortgage modifications, sometimes referred to as loan modifications, typically involve the following:
- A reduction in the initial interest rate on the loan;
- An extension of the length of the term of the loan;
- A different type of loan; or
- Any combination of the above three.
In order to be considered for a mortgage modification, you must first demonstrate to the lender that you have an existing hardship that makes it impossible for you to stay current on your monthly mortgage. If you can convince them that this hardship exists, the lender may agree to change (modify) the terms of your loan to make it possible for you to meet your monthly payments.
There is, of course, an application process you must submit that includes the following financial information:
- Your monthly income, expenses and assets;
- Your most recent pay stubs and tax returns;
- A hardship letter that explains your current financial situation and the problems you’re facing. The letter also has to convince them that you will be able to make the new modified monthly mortgage payment.
Yes, this process can be difficult and you want your application submitted correctly for the best chance of success. Applications can be denied simply because a box was not checked off, causing you to have to re-submit with new updated information, all because of a small error. So while the loan modification process can be challenging, the chances of success increase if it is handled correctly.
How can you increase your chances of success? By having an attorney experienced in these matters submit your application in a professionally prepared manner. With 30 years’ experience behind us and a very experienced staff, we regularly process modifications and fully understand the defenses available to you. We also monitor your application to make sure the lender is working on your file. If there are any objections raised we address them in a timely manner so your matter doesn’t fall through the cracks. Your goal is our goal…the greatest chance for success so that you can move on with your life.
Our firm offers a FREE consultation to prospective clients who are considering a mortgage modification. Or you can give us a call at 732.302.9600.