Loan Modification

If you are struggling making your mortgage payments and are at risk of loosing your home to a foreclosure, loan modification attorneys at Law Office of Resnick & Associates can help you modify your home mortgage to save your home. We re-negotiate the terms of your mortgage with your lender to make the mortgage affordable for your. If you cannot keep up with your monthly mortgage payments due to financial hardship or an increase in the loan payment, contact loan modification attorneys at Resnick & Associates to reduce your mortgage and save your home from foreclosure.

A loan modification is a permanent change to your existing loan. If you have a documented hardship, the lender may agree to modify your loan to help you keep your house on the terms you can afford. The loan is usually modified by reducing the rate and monthly payments, fixing the interest rate to avoid rate increases and sometimes by even reducing the principal amount of your loan or forgiving or delaying missed payments. Sometimes the homeowners need a drastic reduction of payments to minimal payment to take them through temporary rough time, such as a temporary loss of job. Every homeowner’s situation is unique, and we tailor our loan modification to our client’s specific goals. Whatever your financial and family situation may entail, loan modification is for you if you have significant hardship making your mortgage payments and you want to keep your property

Most of our loan modification clients fall into two categories. First group of people have temporary hardship, usually due to a loss of jobs, but also due to a family illness or a divorce. Lenders understand that millions of new people in all walks of life loose jobs every day now, and the unemployment rates are at their record high. Lenders also understand, however, that most people do sooner or later find another job and are willing to modify your loan to take you through temporary unemployment.

Our attorneys closely review your original loan documentation. In many cases we are able to find mistakes in the way your loan was originated and written. We request many documents from your lender based on your rights provided pursuant to the Real Estate Procedures Settlement Act (RESPA). We examine whether all procedural safeguards were followed, such as Truth in Lending and other disclosures. We also look closely at the program that you obtained. Did you apply for the same program that you ended up with you? Were all the terms properly explained and disclosed to you? Does your loan conform to the Consumer Protection Laws? In some states mortgages given without regard to the borrower’s ability to repay it, such as income verification, have been declared unlawful and violating the Consumer Protections Laws

Loan modification involves two important points, both of which need to be proven to the lender. First, you have to convince the lender that you cannot keep up with your current mortgage payment. This means that you demonstrate that you have a hardship, for example:

1. Illness of the Borrower or in the Family
2. Loss of Job
3. Property Problem, such as unfinished or defective construction or damage due to disaster or poor craftsmanship
4. Inability to Sell the Property
5. Inability to Rent the Property
6. Mortgage Servicing Problems
7. Transfer of Ownership Delays
8. Reduced Income, including decrease in business or loss of spouse’s job
9. Failed Business
10. Job Relocation
11. Death of the Borrower or income-producing family member
12. Incarceration or other legal troubles
13. Divorce or Marital Separation
14. Military Duty
15. Medical Bills

Almost every client who contacts us has some sort of hardship that makes it difficult for them to pay their mortgage. But what many non-professional loan modificators do not tell you, as attorneys we do, is that there is another very important hoop you have to jump through to modify the loan. You not only have to convince your lender that you cannot make your current mortgage payment, but you also have to prove that you will be able to make your new modified payments. If you cannot prove any income in your family, whether borrower’s or the borrower’s spouse who does not necessarily have to be on the note, the lender may not be able to modify your loan. Nevertheless, the lender will also consider that your loss of income can be temporary and it is our job to present your situation, no matter how grim it may be today, to the lender in a light that would show them that you are likely to recover from this temporary financial downturn and your future earning potential is sufficient to make newly negotiated mortgage terms.

Perhaps, one of the major differences between having your loan modification conducted by attorneys or non attorneys, who often are the same people who sold you predatory lending products such as adjustable mortgages, is that we will always be truthful to you. We are governed by the strictest ethical rules for any professional. Many mortgage brokers and non-professional loan modificators have been encouraging you lie on your mortgage application and continue encouraging you to make untruthful statements to modify your loan. We, on the contrary, make every effort to encourage our clients to make truthful statements about your financial affairs. Not only will it enable your lender to modify your loan to the terms you will be comfortable with, but it will not backfire if your hardship continues and you have to file for bankruptcy. If you are forced to file bankruptcy you will discharge the obligation you have to pay to the bank for the difference between the amount of your note and the amount at which your house will be sold a t a foreclosure auction (deficiency judgment). However, if you lied on your mortgagee application, the lender has a right to exempt this debt from the bankruptcy discharge and to make you still liable for this amount even if your bankruptcy petition is approved

Obama’s Loan Modification Guidelines

President Obama’s Making Home Affordable plan, announced in March 2009, aims to help up to 9 million homeowners afford their homes in the wake of the current economic crisis. An allied program, called the Home Affordable Refinance can help another 5 million with relatively steady mortgages, but declining home values.

The refinancing plan is offered to Fannie Mae or Freddie Mac loans on properties occupied by the homeowner. The first mortgage cannot exceed 105% of the current value of your home. That means for a $300,000 home, your total debt cannot go over $315,000. You can still refinance a second mortgage provided the first one meets the 105% requirement.

Cash out options will not be available during the refinance, so they can’t be used to pay off other debts. Applications will be accepted until June 2010.

Borrowers may no longer have to be behind on the mortgage to qualify for a loan modification if they fall within the guidelines. Although priority will be given to delinquent borrowers, the main requirement is debt-to-income ratio (DTI) of 31%. This means that your total monthly dues (including insurance, taxes, and association dues) must exceed 31% of your income, which qualifies you as being in hardship. The loan modification option applies to mortgages originated on or before January 1st.

Your home must also be your primary residence. That means it can’t be owned by an investor or used as a secondary home. The plan also puts a price cap on loans for single-family homes: those valued over $759,750 will not be eligible.

The program is voluntary, and it is yet not fully clear what lenders participate. But the government is bent on having most, if not all, of the major lenders take part. Several incentives have been put in place to make loan modification a more attractive option than foreclosure.