Do I Need Good Credit To Qualify For A Loan Modification?
You do not need good credit in order to qualify for a loan modification. The only factors considered prior to a loan modification offer are the homeowner’s income and expenses so that the homeowner’s net income per month can be determined. I have found that some of my clients have been in foreclosure for so long that despite the fact that they are actively in foreclosure, the foreclosure comes off their credit report and they suddenly find themselves with a decent credit score. If you are a homeowner who has been in foreclosure for a while and you have equity in your house in addition to good credit and a sufficient income, then you may want to refinance your house rather than apply for a loan modification. By refinancing your house, you could end up with the same or a better rate and be able to pay off your mortgage.
If I Am Working With The Bank On Getting A Loan Modification, Do I Still Need To Worry About Foreclosure?
Just because you are working with the bank on getting a loan modification does not mean that you don’t have to worry about foreclosure. All too often, people get lured into a false sense of security based on the fact that they are trying to get a loan modification. Oftentimes, the bank will move forward with the foreclosure action while you are negotiating with them for a loan modification. I have known people who thought they were well on their way to getting a loan modification and the next minute they were being served with a summons in complaint.
In New York State, there is a law that says while you are in active loss mitigation—meaning while your case is assigned to the foreclosure conference part—the bank is not supposed to make any motions or move forward with the case you. However, once you leave that foreclosure conference part, you go to a residential foreclosure part, and at that point, the bank can make motions and proceed.
My Mortgage Company Said If I Pay Them A Lump Sum Of Money, Then They Will Stop The Foreclosure. Should I Trust Them?
If your bank tells you that they will stop the foreclosure if you pay them a lump sum of money, you should trust them. However, most people don’t have a lump sum of money lying around. One way to pay on a lump sum is to refinance. Alternatively, you could sell your house to a relative and they could enter into a lease that would allow them to stay in the house while you prepare to pay a lump sum or refinance the house. If you have a $2,000 per month mortgage and you were six months behind, then you would owe $12,000 plus costs and fees. If you could pay a lump sum of $12,000 and reinstate your loan, then you could avoid foreclosure.
When clients come to me, they are usually in a situation where the lump sum they would have to pay is around $80,000 or $90,000, and most people don’t have that much money lying around. There are times when a lump sum payment might be part of a loan modification. For example, if the bank sees that you have a significant amount of money in the bank, then they might agree to give you a loan modification as long as you pay $5,000 or $10,000 upfront. Unfortunately, this is happening with less and less frequency, but it does happen from time to time.
For more information on Good Credit & Loan Modifications In New York, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (212) 766-9779 today.
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