The best way to avoid foreclosure on your home is by modifying the mortgage. Loan modification is an important option for those who are struggling to get through financial difficulties. Through a loan modification, the lender allows the homeowner to renegotiate their mortgage terms in order to make their monthly payments more affordable. Loan modification is by far the preferred path for most lenders, banks, and borrowers when amending a foreclosure. As a Connecticut foreclosure defense lawyer at The Law Offices of Ronald I. Chorches explains, mortgage modification can entail:
- A reduction in the principal
- A change or reduction in the interest rate
- A reduction or elimination for penalties of non-payment
- A reduction or elimination of late fees
- Forbearance (extend payment timeline or temporarily halt payments)
Those who are having trouble keeping up with their mortgage payments can consider asking for a loan modification from the lender. But keep in mind that the lender may or may not permit a modification, or there may be other options available to you. This will depend on the lender agency and what their policies and procedures offer. Typically, a homeowner is more likely to get approved for a modification if they are currently upside down on the loan. If a person has plenty of equity, the lender may not be as concerned because they know they will get the money they are owed through a sale if the property is taken back.
Modification gives the homeowner a chance to get back on schedule with their mortgage payments, and the bank or lender still receives at least some of the loan compared to none at all. The lender usually prefers to keep a loan active, to ensure that continued payments are received, and the homeowners have relief from an overwhelming debt. Generally, loan modification is the most strategic and ideal avenue to seek. If you aren’t sure whether now is the time to consider asking for a modification, here are signs that it may be time to do so:
- You are simply in too much debt
- You cannot afford to pay all your bills
- You are accruing more debt to pay your bills
- You are living on a tight budget consistently
- You have adjustable-rate mortgage concerns
Unfortunately, not all loan agencies are as willing to compromise as others. Some may be aggressive and try to force a homeowner into foreclosure without providing any options. If the lender or bank does not abide by state laws and proper procedure when bringing forward an action, that may be enough grounds to halt the foreclosure. A lawyer can oversee this process to protect the homeowner from unlawful actions committed by the lender or bank. Some lenders may even refuse payments and instead shove homeowners into foreclosure without giving them opportunity to get back on track. Some loans are serviced by a third party, who are not as directly invested in the situation or people involved. Whatever the case may be, homeowners are wise to consider recruiting help from a legal team as a foreclosure is being processed or fought, so that their best interests are protected.