Mortgage and Loan Modifications

Mortgage Mitigation

Mortgage modification, or more accurately, loss mitigation

When circumstances beyond your control, resulting in a situation where you are unable to make your monthly mortgage payment, it is virtually impossible not to feel helpless and overwhelmed. A temporary loss of employment, illness, divorce, natural disasters, just to name a few, can leave severe financial havoc in their wake. Your interest rate may also have increased due to the expiration of an “arm” or your mortgage rate was always variable.

It is important to understand that a mortgage modification is not the same as a loan refinance. A refinance is dependent on the good credit standing of the borrower and is typically undertaken to lower the interest rate, add or remove co-borrowers, and even cash out equity. In contrast, the objective of a mortgage modification is to achieve a more affordable mortgage payment, based on a showing of hardship. A mortgage modification is not dependent on a borrower’s credit score but is highly dependent on income and a showing of the ability to keep up with the modified payments.

In reality, a mortgage modification is just a component of loss mitigation programs that exist in both the Supreme Court and Federal Bankruptcy Court, and include foreclosure defense in the process. In Supreme Court, Loss Mitigation can begin only once a foreclosure complaint has been filed and served by the bank. In Bankruptcy Court, the loss mitigation was adopted some years back and has resulted in a much more effective and streamlined process, with overwhelmingly positive results. Loss mitigation in Bankruptcy Court can begin at any point, whether you’ve only missed a few payments, but feel that you will not be able to catch up going forward or you are several years in default and foreclosure proceedings are underway. Though not advisable to wait, a bankruptcy filing and the commencement of loss mitigation can prevent a sale date from being set or stop a foreclosure sale.

A person who has credit card debt and has defaulted on mortgage payments or has been served with a foreclosure complaint can greatly benefit from filing a Chapter 7 bankruptcy and initiating the loss mitigation process in the course of the bankruptcy case. The main requirement is that the property for which we seek to modify the loan is the primary residence of the debtor/ borrower. Once the bankruptcy petition is filed, an automatic stay prevents foreclosure from starting or moving forward and the duration of the bankruptcy process is extended from the usual four months, to pretty much as long as it takes to achieve a loan modification. Since the process takes place under the court’s supervision, it is much likelier to succeed as the creditor bank has much less opportunity to stall or issue unjustified denials.
A modification of mortgage terms can certainly be achieved outside of the courts, especially in cases of non-primary residences, however, court oversight often plays a crucial role in achieving a positive outcome.
Our firm has navigated the loss mitigation process in Bankruptcy Court for over a decade and has been able to achieve modification of loans in cases with numerous previous denials, modifications of credit lines, and second mortgages, and those that didn’t succeed in achieving a modification through a previous bankruptcy. Our experience and a thorough understanding of the process in Bankruptcy Court is what sets us apart. Our success rate is outstanding, and when initiated timely, we can achieve loss mitigation even in the most challenging of cases.

Let us help you!

Call : (718) 513-3145

Are you looking for someone to help?

Let us help you! Call Now : (718) 513-3145