What To Do When Your Denied For A Loan Modification
It can be frustrating when you find out you have a denied loan modification. In this blog, you will discover the inside secrets on how to stop foreclosure in Illinois. When you are behind on your mortgage or have a sale date pending on your home, the last thing you want to hear is that your loan modification request was denied. Many times lenders may make loan modification offers that are not fair to you because their primary responsibility is to increase shareholder value.
Basically the more your lender collects in interest, the more money they earn each year. Many times, the big banks will make an offer to unsuspecting homeowners with terms that are not always best for the troubled homeowner. They do this because they are a business and need to show up their bottom line. They are hoping you will accept their indecent terms out of desperation to stop your sale date so they can earn a bigger profit.
If you have a denied loan modification, you may have the right to reapply if your circumstances have changed. Most mortgage loan modification applications are denied for two reasons. First they do not meet program guidelines. The second is that the application was not submitted or completed properly. Having a foreclosure attorney working on your case, can help eliminate the possibility of having your loan modification denied.
What Effect Could A Home Loan Modification Have On My Credit
A home loan modification can impact your credit, but the impact may be small. If you are behind on your home mortgage payments, chances are that your mortgage company is reporting negatively on your credit report. However, when Erin obtains a home loan modification for you, the mortgage is then reported as current, on those modified terms. This will help restore your credit, at least as to your home loan.
Loss Mitigation During Foreclosure
It is often difficult for property owners to believe they have options when they are facing foreclosure but, truthfully, there are many. Lenders that handle and manage loans, often called servicers, have a lot of incentive to help property owners keep their property. When a property falls into foreclosure, it creates a lot of work for lenders and servicers, and there is no guarantee they will make their money back from the loan. As such, they are more willing than many people think to work with property owners to avoid foreclosure.
The options available to stop a foreclosure are collectively known as loss mitigation. Loss mitigation is an umbrella term that refers to any action by which the property owner and the lender or servicer work together to stop a foreclosure from happening. Although there are many types of loss mitigation, the three that are most popular are loan modifications, forbearance agreements, and payment plans. Of these three types of loss mitigation, loan modifications are becoming increasingly popular.
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How To Sue A Mortgage Lender To Stop Foreclosure
FRAUD STOPPERS private members are seeing a huge reductions in the balance of their Mortgages. They are staying in their homes while filing for quiet title and similar lawsuits pro-se without an attorney. After having an in depth audit on their mortgage which highlights infractions of federal lending regulations like the Truth in Lending Act , improper transfer and delivery methods as part of securitization, and infractions in collections practices outlined by the FDCPA. FRAUD STOPPERS PMA drafts a lawsuit citing any found infractions and any relevant case law. This combination of Bloomberg verified court ready evidence and lawsuit is extremely effective at proving wrong foreclosure.
Homeowners can Schedule a Free consultation with FRAUD STOPPERS to discuss foreclosure alternatives. Within 48 hours of uploading loan documents for review, customers receive insightful information about the status of their mortgage. The free consultation is an opportunity for homeowners to discuss what their best options are. The FRAUD STOPPERS Free Mortgage Fraud Analysis will identify common aspects of Mortgage Fraud. These results determine what type of lawsuit if an would be an effective means for stopping foreclosure, if any. Lawsuit packages vary in price, and can be filed either pro se or with the help of an attorney.
Loan Modification And Foreclosure Rescue Scams
Beware of loan modification and foreclosure rescue scams. Mortgage rescue scammers falsely claim that they can obtain a loan modification or other relief to avoid foreclosure. Some may pretend to be affiliated with a government agency or a housing assistance program. Others falsely claim to provide legal representation, predatory lending investigations or forensic loan audits of your mortgage paperwork. These companies may claim that by using their services, they can pressure your lender and negotiate a good deal. Unfortunately, these operations often fail to obtain the relief they promise, and some companies take payments upfront and make little or no effort to help consumers.
No person or companyincluding attorneys, foreclosure consultants and real estate agents can demand advance payment for providing loan modification services in California. .) This means that a company or individual cannot obtain payment from you until after they perform all the services promised in your contract or agreement. In addition, mortgage foreclosure consultants who offer to stop foreclosure or assist you with obtaining a modification or other relief are required to register with the Attorney General and post a $100,000 bond. Search for the name of a foreclosure consultant to find if they are registered at Is Your Foreclosure Consultant Registered?
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How To Obtain A Loan Modification
Loan modifications are very helpful for borrowers, but they must obtain one before they can reap the benefits. The first step in obtaining a loan modification is to contact the lender or loan servicer and ask for an application. When you receive the application, it will likely outline everything you will need to provide along with the completed application.
Generally speaking, you will have to provide details about your finances including the income you earn, the expenses you incur on a regular basis, and any other details that may be relevant. You will also be asked to provide certain documents that prove certain elements of your case. These may include the fact that the property is your primary residence or place of business, an explanation of the financial hardship you are experiencing, and the regular income you will earn in the future that will allow you to make timely payments under the new terms of the loan.
In most cases, it is best to work with a foreclosure defense lawyer that will help you through the process, negotiate with your lender, and give you the best chance of success with your case.
Work It Out With Your Lender
This is a good option if you had a temporary setback that prevented you from making your mortgage payments for a period of time and are now able to continue making payments in full each month, but cant afford to pay back the missed payments in one lump sum.
Your lender may be willing to work out a repayment plan to get your past-due loan back on track, provided you wont have trouble continuing to make payments going forward. As part of this repayment plan, the lender will take the amount you owe in missed payments and add increments of it to your regular monthly payments, allowing you to pay back what you owe over a specified time period.
As you work with your lender to create a new payment plan, be sure to honestly evaluate what you can afford to pay back each month and dont agree to pay more than what you know your budget can handle. Ask about other mortgage relief options. Depending on the situation, your lender may offer one of the options below.
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Foreclosure And The Coronavirus Pandemic
During this pandemic, which has created extraordinary hardship for millions of people, there are relief options available to homeowners. If you have a government-backed mortgage , youre protected under The Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act. This allows homeowners to get into a forbearance program if theyre unable to make their mortgage payments because of COVID-19. Currently, there is no expiration date for this benefit.
Forbearance is not automatic, you have to request itdont just stop paying your mortgage, says Cristian Salazar, deputy director for communications at the Center for NYC Neighborhoods, a nonprofit that promotes affordable homeownership in New York. Contact your servicer and explain that you have been affected by COVID-19. Its critical that you make every effort to pay your mortgage until you have the opportunity to speak with your servicer.
Stopping payment on your mortgage before speaking to your servicer could put you at risk of being ineligible for future relief, Salazar says.
Here, well go over the basic foreclosure process and what you can do to avoid foreclosure. Keep in mind, foreclosure procedures and laws vary by state.
File A Lawsuit To Stop The Foreclosure
If your bank is using a nonjudicial process to foreclose, where the foreclosure is completed outside of the court system, then you might be able to delay or stop the foreclosure by filing a lawsuit against the bank to challenge the foreclosure. You’ll need to include a motion for a temporary restraining order and preliminary injunction to enjoin a foreclosure sale while your claims are being litigated.
To prevail, you’ll need to prove to the satisfaction of the court that the foreclosure should not take place because, for example, the foreclosing bank:
- can’t prove it owns the promissory note
- didn’t act in compliance with state mediation requirements
- violated a state law, like a Homeowner Bill of Rights law
- didn’t follow all of the required steps in the foreclosure process , or
- made some other grievous error.
The downside to suing your bank is that if you’re unable to prove your case, you’ll only delay the foreclosure process, perhaps briefly. Lawsuits can be expensive and, if you have no reasonable basis for your claims, you could get stuck paying the bank’s court costs and attorneys’ fees.
Ask the Servicer to Postpone the Sale
If a foreclosure sale is at hand, you might consider asking the servicer to postpone it. Usually, the servicer won’t agree to reschedule a foreclosure sale, but it doesn’t hurt to ask.
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How To Avoid Foreclosure
It is important to scrupulously research the best interest rates available and pick the mortgage term that is right for you. For example, 40-year mortgages will typically allow you to make lower monthly payments than traditional 30-year fixed mortgages. That said, the interest rates for these mortgages tend to be higher. Use an online mortgage calculator to best estimate your total mortgage costs and plan ahead.
If your home is at risk of foreclosure, dont start packingtake action. The following options for avoiding foreclosure should be easily available to anyone with a government-backed loan provider and built-in mortgage insurance, such as in an FHA loan.
Can Bankruptcy Save My Home
If loan modification is unrealistic for your situation, then bankruptcy can be an effective tool for protecting your assets, such as your car and home. For more than three decades, our bankruptcy attorneys have helped homeowners prevent foreclosure by filing for Chapter 13 bankruptcy or halting the foreclosure process with Chapter 7 bankruptcy.
You can benefit from a Chapter 13 bankruptcy in the following ways:
- Chapter 13 bankruptcy can stop foreclosure sales on homes, even if you file at the last minute.
- Unlike a loan modification, you do not have to be behind on mortgage payments to file for Chapter 13.
- Chapter 13 reorganizes your debts into a single monthly payment plan that lasts for three to five years. This can help you stay on track with your payments and get current on your mortgage.
- Other unsecured debt, such as credit cards, may be discharged in bankruptcy upon completing your Chapter 13 repayment plan. This can make it easier to keep up with your mortgage payments after bankruptcy.
- If the circumstances are correct, then you may be able to use lien stripping in Chapter 13 bankruptcy. This allows you to reduce or eliminate payments on second mortgages.
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If You’re Facing Foreclosure You Might Be Able To Stop The Process By Filing For Bankruptcy Applying For A Loan Modification Or Filing A Lawsuit
Foreclosure Moratorium If You Have a Fannie/Freddie Loan and Apply to a Homeowner Assistance Fund Program
If you have a Fannie Mae or Freddie Mac loan and your loan servicer learns that you’ve applied to your state’s Homeowner Assistance Fund program, the servicer must suspendforeclosure activities for up to 60 days.
If you’re behind on your mortgage payments and a foreclosure sale is looming, you might still be able to save your home. You can potentially file for bankruptcy or file a lawsuit against the foreclosing party to possibly stop the foreclosure entirely, or at least delay it. If you have a bit more time on your hands, you can apply for a loan modification or another workout option.
If The Servicer Breaks The Rules
The new rules have teeth.
Borrowers who believe their servicer has failed to follow the rules can sue the servicer. If you can prove your case, you can collect your actual damages as a result of the violation your costs of suit and your attorneys fees.
These regulations implement provisions of the Dodd Frank legislation they became effective January 10, 2014.
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Why Lenders Permit Mortgage Modification
Adjusting a loan tends to be less expensive and time-consuming for lenders. It also takes less of a financial and emotional toll on homeowners when compared to the other ways lenders can recoup money from a borrower who cannot repay their loan.
Without a loan modification, your lender has several options. Once you stop making mortgage payments, they can:
- Foreclose on your property: A mortgage modification is a nicer alternative to foreclosure. This occurs when a bank takes back a home, evicts the homeowner, and sells the home of the borrower who cannot repay their loan.
- Facilitate a short sale: This refers to the sale of a home for less than what the homeowner owes on their mortgage. It still results in the homeowner losing their home.
- Attempt to collect the money you owe through wage garnishment, bank levies, or collection agencies:With wage garnishment, a creditor must get a court order to have a portion of your paycheck withheld to pay off your debt.
- Charge off the loan:In lieu of a foreclosure, a lender might decide to write the loan off as a loss if they determine that the debt is unlikely to be collected.
- Lose the ability to recover funds:If you declare bankruptcy, which can temporarily halt a foreclosure, the bank may not be able to recoup the funds.
Is There Foreclosure After Loan Modification
If your lender is willing to work with you, or you can qualify for the HAMP program, theres a good chance you will manage to avoid foreclosure by loan modification.
After youve come to an agreement with your lender or through HAMP, its important that you do your best to stick to it. If things change and you can no longer meet your new terms, you should contact them right away to work it out.
Only in the worst case scenarios will you still be faced with foreclosure after these steps. But there are still ways to avoid it, such as with a short sale. We can help with that to get a quote.
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When Do You Need To Get A Loan Modification
When you find yourself in a situation wherein youre no longer capable of paying back your original loan, you may consider a loan modification application from your lender. Aside from filing for bankruptcy, a loan modification is one way of avoiding foreclosure. If a foreclosure is imminent or during a settlement procedure, lenders may approve your request for a loan modification if this option is proven to be less costly compared to a charge-off or a foreclosure.
An Overview Of The Home Loan Modification Process
A home loan modification application can be complex and involved. Erin has successfully obtained literally hundreds of home loan modifications for her clients throughout the past decade. She literally has a personal library of all the forms and required documents needed by each mortgage servicer in order to complete a successful modification. She is currently lobbying the federal courts to allow for a unified portal to get required modification documentation to servicers in a unified manner. She is a strong believer in the loan modification process.
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Your Guide To How To Avoid Foreclosure By Loan Modification
Foreclosures are a problem that can affect anyone. If youre trying to avoid foreclosure, youre not alone. One out of 200 homes gets foreclosed on, according to the FDIC.
Luckily, there are a few ways you can avoid foreclosure. Wondering if you can avoid foreclosure by loan modification? Then this guide is for you. Were here to help you see whether or not modifying your loans is a good way for you get keep from getting foreclosed on.
In this guide, well answer all your questions about how loan modification might be able to stop foreclosure. Keep reading to learn how you can keep your home.
Deed In Lieu Of Foreclosure
Another way is to willingly give your property to the lender in return for pardoning your debt. You will qualify for a deed in lieu of foreclosure only if you cannot sell your home before foreclosure. The only advantage of this option is that you are rescued from foreclosure and the lower credit record that inevitably results from it.
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