Mortgage loans are the most likely to be modified, since they present a big burden, and mortgage payments often get sacrificed or paid late in order to meet other expenses such as food, utilities, or medical bills. There are many different home loan modification programs available, including in-house modifications and government programs such as the Fannie Mae and Freddie Mac Flex Modification program and the federal Home Affordable Modification Program.
However, loan modification is not the best solution for everyone; and if you take that route, you may find that instead of helping you get past a difficult financial time, your modification is causing additional problems.
If you are a Columbus resident struggling with unmanageable debts, it makes sense to get professional help before taking steps toward loan modification. The seasoned Columbus, Ohio, bankruptcy lawyers at Fesenmyer Law Offices, LLC provide free initial consultations for people throughout the Columbus area who have gotten into financial difficulty. We will examine your individual situation and determine whether loan modification is the best way for you to find relief from your debts. Contact us today by email or call 614-228-4435.
What Happens With Loan Modification?
Modifying a loan involves negotiating with your lender to change some aspect of the loan so you can lower your monthly payments. This can be done by:
- Lowering the interest rate while extending the total length of the loan
- Adding to the principal that you owe
- Adding your missed payments to the end of the loan repayment
The result will be lower monthly mortgage payments, but you will have to pay for a longer period of time, and you will have paid more at the end of the loan. Still, loan modifications may be good for people who:
- Have high-interest loans and do not qualify to refinance their loan
- Have lost their job or make less money then when qualified for the loan
- Are faced with unexpected medical or other expenses that make it difficult to meet current payments
- Have a loan on a house that is higher than the value of the house
While some banks or other lenders are reluctant to do so, many will agree to modify your loan. This is because most lenders do not want to foreclose on your house or seize your property. Lenders prefer to receive payments, even for a lower amount, rather than deal with reclaimed property.
However, since making a mistake can cost you money, and people have been taken advantage of in loan modification scams, it makes sense to have an experienced loan modification attorney help you negotiate with your lender and make sure you are getting a legitimate modification under the best possible terms.
Problems with Loan Modification
The following are some problems you can run into with loan modification.
1) Loan modifications are confusing and involve lots of paperwork. In order to qualify, you must file hundreds of pages of complicated forms and provide evidence, and it’s easy to agree to something you hadn’t intended.
Required paperwork usually includes:
- a financial and hardship statement
- bank statements and proof of income
- most recent tax returns
2) The lender benefits most. The lender changes the new terms of your loan and will do so in a manner that is profitable.
3) Loan modifications are a hassle and attract con artists who know that people asking for loan modifications are struggling and vulnerable. They may try tactics like collecting illegal upfront fees for loan modification services, and never even provide the loan modification.
Alternatives to Loan Modification
There are alternatives to loan modification, including:
- Getting out of a home loan through foreclosure or a short sale. In this case removing the debt means you will lose your home and could be held liable for the balance owed to the mortgage company
- Forbearance agreements. A forbearance agreement provides short-term relief for borrowers for a set period of time. The lender reduces or suspends mortgage payments during this time period. You resume the full payment at the end of the forbearance period and also pay an additional amount to get current on the missed payments, principal, interest, taxes, and insurance.
- Repayment plans. A repayment plan is an agreement to spread the amount past-due because of missed payments over a specific period of time, usually for a three- to six-month repayment period. A portion of the overdue amount is added to each of your regular mortgage payments until you are current, and then you resume paying your normal payment amount.
- Filing for bankruptcy. Chapter 7 or Chapter 13 bankruptcy is a way to eliminate debt and get a fresh start on the road to financial recovery. Once you file, the automatic stay provisions will prohibit many creditors and lenders from taking collection actions against you. A Chapter 7 will forgive you of any balance owed to the mortgage company if you surrender the property. A Chapter 13 bankruptcy will allow you to cure the amount you are behind on the mortgage loan over a three to five year period so that you can keep your home.
Contact Us For Help
Whether or not you decide on loan modification, don’t make the mistake of going it alone when there is help available. If you find yourself drowning in debt and being harassed because you are unable to make payments, take the first step toward getting your life back on track by contacting the experienced and compassionate debt-relief attorneys at Fesenmyer Law Offices, LLC today for a FREE INITIAL CONSULTATION.
We know what you are going through. We will evaluate your entire financial picture by looking at your income, your debts and your goals, and we will discuss the best fit for your individual situation. We will walk you through every phase of the loan modification or other debt-relief processes and find what works best for you. We have helped thousands of Ohio residents find new hope.
Delaying can only make your situation worse, so call the Columbus, Ohio, loan-modification attorneys at Fesenmyer Law Offices, LLC today at 614-228-4435 or email us for your free consultation.
