One method of dealing with a distressed mortgage, when you and your attorney decide it is appropriate after analyzing together all your financial data, is a mortgage loan modification. A loan modification is negotiated by agreement between homeowners with a mortgage in default and the bank holding the mortgage to reduce the interest rate to make the mortgage payments affordable, lengthen the time over which the mortgage is repaid to make the payments affordable, or both.
A loan modification agreement is a fairly complex transaction that absolutely requires a competent attorney who can protect your interests and be sure the transaction proceeds smoothly and is to your advantage.
Additionally, mortgages are complex legal documents with many variations in terms, requiring a competent attorney to review them and make the new mortgage is fair with no hidden pitfalls. You do not want to get into another bad mortgage or one worse than the last.
Your advantage is that the bank would rather do a short sale than foreclose or take a deed in lieu of execution, because it would then have to take possession of the house and pay all the utilities, taxes, and other upkeep costs while marketing the house.
Once the bank agrees to allow you to apply for a loan modification, you will be required to submit financial documentation of your income and expenses as well as three years of tax return transcripts obtained from the IRS. These documents (other than the tax return transcripts) cannot be more than 30 days old when the bank makes the decision to agree to loan modification.
In the case of government-insured mortgages where you are paying mortgage insurance premiums, this is actually a government regulation. Typical bank behavior is to notify you, on the 31st or 32nd day after you submit your documents, that they are now “stale” and you must resubmit new current documents, even if nothing has changed.
A competent lawyer will not allow this to happen. At Williamson and Williams, PLLC we contact the bank every several days to ask if the modification has been approved, and if not, why not. In many cases, we have telephone numbers and email addresses for supervisors and executives within the bank to expedite the process and prevent the endless cycle of submitting new documents that only drives the homeowner deeper in debt.
If a mortgage loan modification is not the right solution to your mortgage problems, see our Short Sale and Deed in Lieu of Execution and Bankruptcy pages.
Contact Media loan modification attorney Robert G. Williamson for a mortgage loan modification consultation today.