The primary difference between a mortgage modification and a mortgage refinance is that instead of looking for a new loan, the terms of your existing mortgage are modified. It is especially helpful for those who may not have significant equity or for those with low credit scores. After a successful loan modification, you will no longer be under the threat of foreclosure as long as you continue to pay your mortgage payments based on the terms of the new, modified loan.
Your eligibility for a NY Mortgage Loan Modification depends on who services your mortgage. Almost all servicers have very similar qualifications. These include:
- that you experienced a documented hardship or change in financial circumstances,
- that you missed three payment or more (at least 90 days delinquent),
- that you own and occupy the property as a primary residence.
In order to receive a Loan Modification in New York you need to demonstrate to the bank that you will be able to afford the new modified loan terms. The bank will review your income, expenses and debt to income ratio. The equity or lack of equity in your house may also be a factor.
So, why would a bank modify your loan? Because, simply put, it is sometimes in the best financial interest of the bank to give you a loan modification. It is fundamentally a cost benefit analysis. It makes more business sense than the alternative which could involve an expensive foreclosure proceeding.
However, a Mortgage Loan Modification is in no way guaranteed. A lender is not obligated to approve a mortgage modification. In fact, statistically, most do not. If an adequate arrangement cannot be worked out with your lender, you may have to seek other alternatives to avoid foreclosure, such as a short sale or bankruptcy.
At the Law Offices of Melvin Monachan, PLLC our New York Loan Modification Lawyers are ready to answer any questions you might have regarding the ins and outs of mortgage modifications.
Please call our office at 516-714-5763 or contact us online to arrange an appointment.