Facing foreclosure can be overwhelming, but with the experienced attorneys at Ziulkowski & Associates, PLC, you may be able to get a mortgage modification and save your home. Mortgage modification is one way to avoid foreclosure. It will usually involve a lower interest rate, extension of the term, adding missed payments to the end of the loan, reduction in principle, or a combination of these. Mortgage modification can:
Mortgage Modification Options: Modification or Refinance?
In the current credit environment refinancing is extremely difficult and time-consuming. Typically, a homeowner must prove that they have excellent credit, job security, and disposable income after the bills are paid, and that they are capable of paying a large mortgage. Wall Street is no longer purchasing loans from banks; therefore lenders have to cut programs for less qualified borrowers. Homeowners that have fallen behind on their mortgage, or who owe more than their house is worth, face an even more difficult time trying to refinance. Quite simply, a mortgage modification may be the only option to help homeowners avoid foreclosure, particularly in this type of credit market.
Will a Bank Grant Me a Mortgage Modification?
A bank must believe that this will be in their best interest, as it does leave them to lose thousands of dollars. In general, they need to know that the homeowner will be able to make payments after a home loan modification, when the terms are re-negotiated. With the current state of the housing market, the lender could face a loss closer to the millions if they are unable to work out a mortgage modification.
When a borrower is no longer able to make their payments the loan becomes what is called a nonperforming asset, as the loan is no longer bringing money to the bank. Turning the nonperforming asset into a performing asset is a matter of income; if a mortgage modification is possible a bank will want to be certain that following the mortgage modification the loan will remain a performing asset.
If the bank grants a mortgage modification, and the borrower is still unable to make the payments the bank loses out even more. This is why it is important to report all of your income on
the income/expenses worksheet, because if the bank does not believe you can make the payment they will not grant you a mortgage modification. It is also important to show that the homeowner is willing to give up luxury items (extra cars, boats, etc.) in order to keep their home.
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