Loan Modifications

Will the bank work with me to modify my mortgage loan?

The success of a loan modification is based on several factors including hardship, income and the ability to pay the loan.  It depends on the individual lender and what programs maybe available. When you request a modification with your lender the process may take several months.  Many people are under the mistaken impression that after foreclosure process is initiated that the lender will not continue foreclosure proceedings if you have sent them the loan modification package.  Lenders will continue the foreclosure process if the loan is delinquent even though they are reviewing your loan for a modification.

The only way to guarantee that the foreclosure process will stop is to file a Chapter 13 bankruptcy.  At that point you have two options 1)  Pay your arrears over a 5 year period.  2)  Attempt a mortgage modification through your Chapter 13 plan by paying 31% of your gross income to the lender. Mortgage mediation is available in the bankruptcy court.  Even if you have had an unsuccessful attempt at mortgage modification previously, you can still go through the mortgage modification in your bankruptcy.  There is a much higher success rate for people who attempt mortgage modification through the bankruptcy process verses people who attempt the modification on their own.  The statistics for our district show a success rate of 70% for mortgage modifications.  The creditor/lender is obligated to comply with the Federal Court requirements and they have accountability with the mediator and court.  The court ordered mediation facilitates more productive communication with the lender.  The benefit is that the foreclosure process will be suspended while your attempting the modification process.

If you are delinquent on your mortgage, bankruptcy offers several options that can definitely help people save their homes.