How Do I Apply For A Loan Modification? Do I Need An Attorney?
You can apply for a loan modification on your own before you are in foreclosure, but you should under no circumstances use a loan modification company in New York State, as they are not even supposed to be operating under the law. If you are going to apply for a loan modification on your own, I would suggest calling your servicer and getting a blank loan modification package. In my experience, loan modifications are rarely given to someone who is not in foreclosure.
As attorneys, we help our clients to apply for and hopefully receive loan modifications. We generally do that as part of our foreclosure defense. At the beginning, the foreclosure case will go to the foreclosure conference part, where we will work with the homeowner and submit a loan modification package. The bank will typically send a missing documents letter and we will supply the missing documents. Then, the bank will either approve or deny the loan modification. If they deny it, there will be an internal appeals process. Generally, a loan modification package consists of an overview document which lists the homeowner’s expenses and income as well as two months’ worth of recent pay stubs, two months’ worth of bank statements, and a hardship letter explaining the reasons for the foreclosure.
What If My Lender Would Rather Foreclose Than Do A Loan Modification?
I’ve been doing this for a very long time and there is no rhyme or reason to why a lender will deny or grant a loan modification. If the lender entered into an agreement with the federal government to give a certain number of loan modifications by a certain date, then as that date approaches, they might just approve loan modifications so that they can comply with their consent decrees with the federal government.
If you have a lot of equity in your house, then your mortgage will be considerably less than the value of your house. For example, if you have a $300,000 mortgage and your house is worth $600,000, then you would have $300,000 in equity. In my experience, banks do not offer loan modifications when this is the case; rather, they will try to run their expenses up and eat up as much of the equity as they can because they know they are going to get the value of your house back in legal fees and expenses. This is called equity stripping, and it’s something that anyone with a lot of equity should be aware of.
Is A Loan Modification An Instant Solution To Mortgage Problems?
If a loan modification is affordable, then it can serve as an instant solution to mortgage problems. When we receive an offer for a loan modification from the bank, we look at the original mortgage and determine whether the modification is significantly reducing or increasing the original mortgage payment. If you get a loan modification that is affordable, the bank will usually start a three-month trial period to determine whether or not the homeowner is serious. Once the homeowner makes three modification payments, the bank is supposed to offer a permanent loan modification. Sometimes those cases fall through the cracks and don’t become permanent, so we have to stay on top of the banks and remind them that they need to make the loan modification permanent once three payments have been made.
For more information on Loan Modifications In New York State, 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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