Loan modifications are an alternative to foreclosure. It can help you keep your home and get back on track. For most loan modifications, the reason for the request is economic hardship. You have lost your job or have experienced a medical condition or illness that has put you in serious debt. Whatever your reason, you are now unable to pay the mortgage and have fallen behind.
If you hope to qualify for the loan modification, you are going to have to prove this economic hardship. Here's what to know about proving financial hardship before you take the next step to contact a real estate lawyer about a loan modification.
Who Qualifies for Loan Modification in New York?
There aren't specific qualifications that a person must meet to qualify for a loan modification, but generally speaking, lenders consider:
- your finances – including your income, loan payment, and other financial circumstances;
- validity of your economic hardship claim – lenders typically have their own guidelines to follow when a borrower wants to modify a loan based on hardship, but usually an economic hardship is one where it was unavoidable or uncontrollable;
- ability to pay the modified loan – if you still won't be able to pay after the loan has been modified, then the lender may choose not to approve a modification.
Saying you are undergoing economic hardship is one thing, but you will also have to prove it.
What Evidence is Needed to Prove Economic Hardship?
Proving an economic hardship often requires a lot of paperwork as evidence. Evidence often submitted with an application include things like:
- proof of income (pay stubs, offer letter, etc.)
- proof of other income (e.g., alimony, child support, disability benefits)
- an expense sheet laying out all your expenses
- tax returns (two years worth of returns)
- profit and loss statement
- current bank statements
- an affidavit or hardship letter.
The hardship letter can be an important part of the evidence if drafted right. In this letter, you want to tell your story. How did you get to where you are now? Illness? Injury? Job termination? Divorce? Death in the family? How has this affected your ability to pay the current loan? To maximize effectiveness, the letter must be both honest and compelling and supported by the other evidence. A real estate attorney with specific experience in loan modifications can help make sure:
- the application is completed properly and timely;
- the hardship letter is well-crafted and persuasive; and
- the evidence supports the economic hardship claim.
This matters because if you are granted a loan modification, you can keep your house or later sell it without the embarrassment or expense of a foreclosure.
Next Step: Contact an Experienced Real Estate Lawyer
Before the lender starts foreclosure proceedings, learn more about your options via loan modifications by contacting a loan modification attorney in New York. But also, know that each lender may have its own unique qualifications and process, so you want an attorney who is experienced and thorough. Contact The Law Offices of Melvin Monachan, PLLC today.