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.
By accepting a loan modification that is not fair to you can actually make it harder for you to get a better loan modification due to modification term restrictions. Knowing your rights, makes it easier to navigate through the loan modification process. That is why it is important to have an experienced foreclosure attorney review your paperwork and assess your situation.
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.
The best thing to do for a denied loan modification is to first find out why the loan was denied. Knowing the reason why the loan modification was denied can help you determine the best course of action for your situation. Sometimes the modification loan modification denial can be something that can easily be resolved, other times, it can be a sign for a different course of action.
Without knowing more about your financial hardship and your mortgage loan history, it is hard to make recommendations. The information presented in these blog posts is not to be construed as legal advice but for informational purposes only. If you would like a free consultation to discuss your situation, please contact our offices right away. There is no cost or obligation and we will be glad to answer your questions. Sometimes having the right person to ask can mean a world of difference. You do not have to lose your home. Contact us now for a free consultation.
If your modification application was denied, it is important to find out if there is a sale date scheduled for your home or not. If there is a sale date scheduled, it may be time to contact an attorney to way out your options. Homeowners have very little tools available to disposal when facing the big banks. Having a foreclosure attorney gives you a significant advantage to help you fight back with your lender.
Ways to Stop Foreclosure Immediately
There are many alternatives to foreclosure. Some foreclosure remedies are as follows:
- Mortgage Refinance
- Reverse Mortgage
- Pay off Delinquent Balance
- Short Term Loan
- Mortgage Loan Modification
- Mortgage Forbearance Agreement
- Chapter 13 Bankruptcy
- Deed in Lieu of Foreclosure
- Short Sale
- Foreclosure Defense
In this section, we will discuss the loan modification pros and cons as well as foreclosure alternatives on how to stop foreclosure for primary residence. One of the first things you should try to do if you can not afford your mortgage payment is to lower your interest rate with a refinance.
The problem most people have when having financial hardship is they wait too long to get help and their credit score has already taken changed for the worse. Many times they wait too late and they get a denied loan modification. In this section, we will cover the most common ways to get help with your mortgage loan. The good news is that there are mortgage relief programs for those facing financial hardship or need a repayment plan for their forbearance amount.
Mortgage Loan Refinance
The best thing to do is refinance your home to reduce your mortgage payments when possible before the emergency hits. This way you can reduce the burden of having a higher mortgage payment that may be difficult to afford. Remember the old adage, an ounce of prevention is worth a pound of cure. You should always try to reduce your mortgage loan payments when possible. Once you fall behind on your mortgage loan, most lenders will not refinance your loan any more until you have at least 12 months of on time payments. This creates a real problem for most homeowners who are delinquent on their monthly mortgage payments.
Homeowners experiencing a financial hardship and are over the age of 62 and have a fair amount of equity in your property, you may be eligible to receive a reverse mortgage. With a reverse mortgage, you can pay off your existing mortgage and other debts without having to make monthly mortgage payments on the home. This works whether your loan is a Fannie Mae loan, Freddie Mac, or even if you have a federally insured loan like an FHA or VA Loan. This may be an excellent option for those with lots of equity and don’t have an income to support their retirement needs or do not qualify for a mortgage loan modification.
Pay off Delinquent Balance
If your situation has changed and you have money to pay off the past due amount, you may do that almost to the very end. You may be able to raise money from selling other assets. If you have a car, boat, camper, second home, jewelry or collectibles, you may be able to sell those assets to raise cash. Sometimes you can borrow from life insurance policies. While this is not always the best options, it may be an option of last resort. We do not recommend selling retirement assets because retirement assets may be untouchable in a lawsuit or bankruptcy and may be needed down the road.
Short Term Loan
If you have a friend or family member (rich uncle) you may borrow the money to pay off your past due mortgage balance. A short term loan is a good option for those who are certain they have a windfall of money coming in soon. If you have no idea where you will get the money, it may not be worth ruining the relationship as there are other alternatives to help you keep your home and stop the foreclosure process in Illinois.
If you have exhausted these avenues and want to keep your home, the best way to stop foreclosure is with a mortgage loan modification. Modifying your loan may allow your lender to postpone delinquent balances and spread them out over time. With a loan modification, those suffering from financial crises may be able to get a reduction in monthly mortgage payments reduce their interest by modifying the original terms of the mortgage agreement. In some cases lenders may forgive a portion of the loan, known as a principal reduction or principle forgiveness.
When seeking a loan modification or short term repayment plan, your mortgage company will require updated financial information. Your lender will also request proof of income and bank statements from you. A loan modification is one of the fastest roads to your credit score recovery. To arrange a free consultation to discuss whether a loan modification is right for you, call the Law Offices of Jeffrey A. Avny.
Mortgage Forbearance Agreement
A mortgage forbearance agreement is for temporary hardship in which a lender offers to a borrower reduce or suspend mortgage payments for a specified period of time while agreeing not to initiate the foreclosure process during the specified period. Lenders offer this in exchange for the borrower’s to resume full payments at the end of the agreement. There may be some additional fees to get the loan current for additional items such as, missed payments, including principal, interest, taxes, and insurance or other fees.
While a loan modification is more of a permanent change in terms, most lenders will offer a temporary fix such as a forbearance agreement with hopes of a borrower accepting a lesser foreclosure alternative which is usually more profitable to the bank.
Chapter 13 Bankruptcy
Filing for bankruptcy can stop foreclosure immediately as a judge will issue an automatic stay order. Often used as a last minute defense, a Chapter 13 Bankruptcy can help you stop the foreclosure sale at the last minute on your home. This plan allows you to make up late payments and postpone the sale date until a judge reviews your case. A Chapter 13 Bankruptcy can also be used to reduce junior liens such as a second or third mortgage or even a mechanic’s lien.
The main purpose of filing a Chapter 13 bankruptcy during foreclosure is to stop the sale date and provide homeowners the opportunity to delay or prevent foreclosure and pay off back debt on their mortgages.
Deed in Lieu of Foreclosure
If you have exhausted all avenues and decided for one reason or another, that you do not want the house, then a deed in lieu of foreclosure may be a good bet. Basically a deed in lieu of foreclosure will allow you to surrender your interest in the property to your lender in exchange for forgiveness of any losses the bank endures. Many times lenders will not negotiate the best terms to a homeowner. That is why it is best to have an attorney represent your interest in the property to help minimize your exposure and protect you from any hanging liability.
A short sale allows you to sell your home for less money then what the home is worth without having to worry about coming up with the shortage or loss. While many home values have recovered from their subprime mortgage crash, there are still quite a few that are still upside down. A short sale is a great way to separate yourself from the property if you no longer want the home and have decided a loan modification is best for you. Our office can help negotiate a short sale for you and limit your liability. Contact us for a free consultation.
There are many reasons to go through foreclosure defense. The primary reason for foreclosure defense is a denied loan modification lawsuit. Foreclosure defense is basically suing your lender because your rights were violated. Foreclosure defense also allows you the opportunity to renegotiate your loan for a modification of terms. While there a numerous reasons to file suit against your bank, many of them have little chance going further. The most common use of foreclosure defense is to help prolong the inevitable sale date for those who have exhausted all options and want to buy more time. A predatory lending attorney can help you with these types of cases.
The most common reasons for foreclosure defense suits are for TILA violations, terms not disclosed properly or improper serving. All of these tactics and many more can be used to delay the foreclosure process. There have been cases in the US where homeowners were awarded large sums of money or their homes free and clear but those are extremely rare compared to the number of loans modified each year. While this service is effective for delaying the foreclosure sale, it is not always the best for those who want to keep their homes, as a loan modification may provide the fastest solution.
If you are experiencing financial difficulties or suffered from a hardship such as a job loss, loss of a loved one, sickness, injury or illness or are behind on your mortgage, there may be many options available to help you keep your home. Our team has been involved with real estate law for nearly 25 years and has helped over 1,000 people get a loan modification to save their homes from foreclosure.
We offer free consultations, flexible payment plans and may be able to help you keep your home in Illinois. Jeff Avny, one of the highest rated foreclosure lawyers, is a mortgage foreclosure attorney and can show you how to prevent foreclosure. We are here to help and have an excellent track record. Call our office for a free consultation.
Avny Law Group provides foreclosure legal services throughout Illinois including: Addison, Arlington Heights, Aurora, Barrington, Bartlett, Bensenville, Berwyn, Bloomingdale, Bolingbrook, Broadview, Buffalo Grove, Burr Ridge, Cicero, Des Plaines, Downers Grove, Elgin, Elk Grove Village, Elmhurst, Elmwood Park, Evanston, Franklin Park, Glenview, Gurnee, Hoffman Estates, Itasca, Joliet, Lombard, Maywood, Melrose Park, Morton Grove, Mount Prospect, Mundelein, Naperville, Niles, Oak Brook, Oak Lawn, Oak Park, Orland Park, Oswego, Palatine, Park Ridge, Posen, Prospect Heights, Rockford, Rolling Meadows, Roselle, Schaumburg, Skokie, Summit, Tinley Park, Villa Park, Vernon Hills, Volo, Waukegan, Wheaton, Wheeling, West Chicago and Zion. We represent clients from Cook County, DuPage County, Kane County, Will County, Kendall County, Lake County and all of Chicago.