Times are hard for many right now and COVID-19 has affected a large number of homeowners' abilities to pay their mortgages on time, increasing their risk of a possible foreclosure. If you or someone you know is unable to meet their mortgage requirements, you might be entitled to a loan modification.
What is a Loan Modification?
A loan modification is an agreement between you and your mortgage lender that allows you to alter the original terms of your mortgage. The modification can be applied to anything in the original agreement, including the amount you pay each month, the length of the loan repayment, your interest rate, etc. The goal is to lower your monthly payment and keep you from defaulting on your loan. And remember, it is a costly endeavor for a bank to follow through on a foreclosure proceeding, so most are eager to consider a loan modification first.
What Does the Bank Look at When You Request a Loan Modification?
The bank will look at whether you've been making regular mortgage payments, how long it's been since you've been able to make one, and whether you are facing an imminent default on the loan. To determine whether you are about to default, they will look at your job and marital status, and any disability or illness that is affecting your ability to repay your mortgage.
The same process is true whether you have a residential or commercial mortgage.
Why Do They Look at These Elements?
Lenders want to know why you are unable to pay your original monthly mortgage agreement on time. They will look at the factors that caused your income to drop and ensure they are valid reasons for them to alter a binding contract. Therefore, it is important that you don't avoid lender phone calls or procrastinate on talking through your options with them. If your circumstances warrant it, they will help.
If you are having trouble understanding the process to loan modification, don't delay, contact a real estate attorney today. A real estate attorney will help ensure the loan modification process is done quickly and efficiently, protecting your residence or business, and in turn protecting your and your family's well-being.