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Available Programs for Loan Modifications

Loan Modification Programs As An Alternative To Bankruptcy

For many clients who come to Kurland Law Group, bankruptcy may not be the answer to a pending foreclosure. By spending time with clients and identifying their individual needs, a reliable bankruptcy firm’s loan modification lawyers employ strategies that many times do not involve a Chapter 7 or Chapter 13 filing.

Many Maryland residents are still facing financial problems and falling behind on their house payments. Continuous calls from a lender lead to more serious actions involving a notice of foreclosure. Options outside of filing bankruptcy or giving up the property seem nonexistent.

Because many people face several financial hardships in their situation, often the result or aftermath of this is getting behind mortgage payments. When someone loses their job or their business keeps going bad, debts, payments,  bills and other financial responsibilities might get affected. When you are in the same situation, applying for a loan modification that fits your current financial state is the best idea. This can help you prolong your stay in your home. This is also one of the best solutions to stop foreclosure.

If you are in need of dire help for a loan modification, you can call or book a schedule with a reliable loan modifications attorney to help with your case.

 

Loan Modification

A loan modification is a change of terms for the payment of a mortgage or loan because of the debtor’s incapacity to fulfill the original term. In a loan modification, the debtor asks the creditor to re-adjust the payment or payment schedule based on the current financial state of the borrower. In most loan modifications, changes in terms involve a reduction in the interest rate, sometimes an extension of the payment period, different types of loans, and/or a combination of the three. 

Most loan modification application is a result of a financial crisis faced by the debtor. Since most loan modifications are available for secured loans such as a house and a car – neglecting the monthly payment or agreed payment can result in foreclosure or repossession. To prevent this from happening, loan modifications are usually the lesser drastic solution to prevent or stop foreclosure. 

By working with competent attorneys in Rockville, Maryland, you are ensured for the needed legal assistance in the loan modifications process. Since loan modification needs a legal attorney to help with the negotiating – your attorney can also provide insightful opinions to better the debtor’s financial crisis. There are other bankruptcy alternatives to consider when debt is starting to become unmanageable. Knowing your options is the first step towards financial recovery.

 

How do Loan Modifications work?

Most loan modification processes involved talking or negotiating directly with the creditor or lender. It is important to prevent using a third-party company to mediate with loan modifications. Most third-party companies collect fees and other charges that could cause an extra financial burden on the debtor. It is also wise to work with your trusted Loan modifications attorney to help with the negotiation and loan modification process.

The application also includes identifying necessary information about the mortgage and the property. Some creditors or lenders require debtors to submit bank statements, pay stubs, tax returns, and other information about the debtor’s income and expenses. In this way, creditors can have an idea of whether the debtor really needed a loan modification program. 

During the application, the debtor must also provide proof of the current financial hardship he/she is facing. The debtor must effectively communicate why they can’t keep up with the current payment schedule and agreement and ask for a lower or much longer payment term to compensate.

 

Loan Modification Applications

Since the common forms of mortgages applied for loan modifications are housing, there are different programs and negotiations that can be applied. Debtors may directly communicate with the creditor company or management for the loan modification program available. Otherwise, they can consult a professional loan modification attorney to help them with the applications.

In some cases, government programs for housing loan modifications can also be an option. To apply for different modification that fits you, you can either ask your local state about the possible loan modifications program to prevent foreclosure or seek professional legal assistance from a law firm specializing in debt relief.

The very important note here is to beware of the third-party company that claims expert in “negotiating”. Most negotiation or loan negotiations can be done by the debtor themselves or through the help of their lawyer. Aside from that, using third-party companies for loan modifications may lead to miscommunications and possible denial of the application.

 

Government Loan Modification Programs

Because of the Covid-19 pandemic, many are affected because of the lockdowns, and businesses going bad, resulting in a lot of people struggling financially. Some lose their job and some close down their business. Because of this, many people filed for loan modifications in the United States and many creditors also file for foreclosure.

To prevent losing the home, the government has created different government-sponsored loan modification assistance that can be applicable to some borrowers. These are:

  • Fannie Mae. A government-sponsored mortgage company that offers a loan modification program called Flex Modification.
  • FHA-HAMP Program. These are mortgages insured by the Federal Housing Authority.
  • Military veterans mortgage delinquency. Military veterans can get mortgage delinquency counseling through the assistance of the U.S Department of Veterans Affairs. 

Different loan modification programs require different qualifications. The requirements for these programs are mostly based on individual cases. It can be on how much the borrower owes, the property used as collateral, and the current value of the collateral property.

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Stop Foreclosure Through The Making Home Affordable Program

Programs do exist outside of bankruptcy that not only stop the foreclosure process but also make monthly payments more affordable. In recognition of the struggles that many people face, the Obama administration introduced the Making Home Affordable program for struggling individuals looking to modify or refinance their mortgages. To qualify, clients must be:

  • Behind on mortgage payments
  • Unable to make new payments based on rate changes or escrow adjustments
  • Suffering a financial hardship that can be documented
  • Willing and able to make more reasonable payments

The Kurland Law Group helps clients enter into new mortgage agreements with their lenders. The firm facilitates negotiations and finds a middle ground that works for both parties. The client’s best interests are served by avoiding foreclosure and protecting their credit ratings and home equity. Banks do not have to deal with property that has lost value, affecting their profits and bottom line.

 

Possible Defense Against Foreclosure

The debtor or borrower together with their trusted legal attorney can challenge the foreclosure depending on their circumstances. Mostly the court will stop foreclosure when they notice improper or lack of strong grounds for foreclosure to proceed. 

Some examples of possible defenses that can be made are:

  • The lender made or used an improper affidavit of declaration
  • The creditor or lender did not follow state procedures on significant issues.
  • Foreclosing entity doesn’t have proof that it owns the loan. In this case, the bank or the lender has to produce a promissory note. 
  • A significant mistake was made during the servicing of the loan.
  • The creditor or lender breached their contract.

 

Bankruptcy as an Alternative Option to Stop Foreclosure

When all things fail, bankruptcy can be the last resort to save your home. By applying for bankruptcy, the bankruptcy court may allow automatic stay to stop any repossession or foreclosure. Talk with the best bankruptcy attorney in your local area to help you with Bankruptcy chapters you can apply and other bankruptcy alternatives you can choose from.

By applying for bankruptcy, it will give the debtor more time to rethink better solutions to keep the house or property from foreclosure. 

Applying for Chapter 13 is applicable or best for a debtor who is behind the mortgage but can somehow still make payments. In this chapter of bankruptcy, debtors can save his/her home through repayment plans that they can afford. Mostly, the repayment plans can either range from three to five-year plans. In these repayment plans, the debtor can pay the missed monthly repayments until the repayment plan is up-to-date.

This way, debtors or borrowers can have the opportunity to catch up with their mortgage payments and save their homes.

Although bankruptcy is not the best solution and is not recommended for all, it can be a good solution in some dire situations. Talk to your bankruptcy attorney about the possible effect on your current financial credit and what will happen after filing for bankruptcy.

 

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To help you with your situation, it is better to plan and consult our law firm with your case. It is wise to consult an attorney when you are facing the risk of foreclosure or wanted a more successful chance for loan modifications.

For more information on loan modification programs, contact Kurland Law Group at (301) 804-0625 or by email. You can also reach us on our website to schedule a free initial consultation.

Kurland Law Group is a debt relief agency. The firm helps people file for bankruptcy relief under the Bankruptcy Code.

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