Will a loan modification stop foreclosure?

Many homeowners in the United States are having difficulties paying their mortgage due to current financial struggles they are facing. One of the main questions they ask is “Is there someway to stop the foreclosure proceedings?”

Yes! With a loan modification you may be able to bring your defaultingĀ mortgage current once again and possibly achieve a lower monthly payment as well.

If you can afford your home and just not the current loan, you may qualify for a loan modification. Also if you have become delinquent on your monthly payments because of temporary struggles, negotiating a loan modification with your lender will resolve that issue. A loan modification will give you a fresh start and give you a chance to keep the home for you and your family.

Before you attempt to apply for a loan mod you must provide a hardship to your lender as a reason why you are currently having difficulties paying your monthly payments. You will be required to write a detailed letter explaining the reasons to why you are facing these difficulties. Be honest as possible when writing the hardship letter because your lender is going to ask for all of your financial information including pay stubs, bank statements, tax returns, etc.

Your lender will also pull a credit report to see all of your other debts. Some good examples of hardships lenders are considering are; incarceration, illness, loss of job, reduced income, death in family, medical bills, and major damage to your property(such as a natural disaster or possibly even vandalism).

Once you have prepared your hardship and financial information you are now ready to make the initial call to your lender. Give the representative a brief description of your hardship and let them know you want to apply for a loan modification. You will be then asked to fax in all the information I had listed and the modification process will begin.

Something everyone needs to know is that it is very important to be polite, patient, but firm at the same time. Remember the lender is the one providing you with assistance and they also have many other modifications in process as well. Every modification is on a case-by-case basis and can easily take four to six months for an answer. Also take in thought that modifications are not guaranteed and you may have to find another way to avoid foreclosure.

But if you are successful and achieve a loan modification you will bring your loan current and begin with a fresh start. Hopefully with a lower interest rateĀ and monthly payment as well!

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6 Comments

  1. I would like to know how it’s possible that your bank could call on a Friday to ask for paystubs to finish the process of the loan modification, yet the following Wednesday their attorney serves foreclosure papers on you. Do I have any recourse to recover the fees that are sure to occur? If they do indeed file the papers in court today too, do I have to file an appearance, etc.? This seems so unfair of my bank. It’s like the left hand doesn’t know what the right hand is doing!!

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  2. P.S. My loan modification was approved at 3:16 on 1/26/10 and the marshal served the papers on 1/27/10.

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  3. I don’t know where to start. My Mum lives in San Jose and has since 1974.

    She has a rental house which is morgaged to the hilt and she has debt. She has a primary which is pertty close to the same senerio. She had an adjustable loan which she could not afford anymore. She wanted help or a modify. So she found this company “Morgage Mediator”. Over the last 6 months she gave them everything they asked for. Now modification has gone through but on the rental and not her primary. It is a mess. The company “Morgage Mediator” said it is the banks fault and they put it through twice for the renta property. But she can’t get any information from the bank/lender. Everyone is pointing fingers. Now the bank has tried to forclose on the rental and the renters got upset and won’t pay rent and are basically squating. The morgage company is telling her to just let it go. It has since gone into Forberence? On top of it they are charging her $750 to do this and it should be the one who made this mistake. The lady was rude to her and said she was going to drop her whole file. Not sure what that will do??

    She has made some really bad choices and now at age 70 my mum is going to loose it all. She worked so hard as single parent. I want her at least be safe and secure in her primary. Any knowledge or help would be a lifesaver.

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  4. A loan modication can stop a foreclosure, however it is dependent on the banks playing fair and truly are attempting to work with you in saving your home. U have been attempting to modify my home for over 4 years with BOA. I’ve submitted several applications after each denial. I think I’ve must’ve requested a modification at last 6-7 time and each time being denied when I definetely qualified for one. The banks are intentionally stalling when reviewing your application, until they can find a reason to deny you. ie. your arrears are more than a partial claim can cover….

    Thank God in NYS, the Attorney General is a fair and honest man and is doing everything possible to help the struggling home owner which is why I am most likely still in my home and able to fight.

    I am in the Mandatory Settlement Conference stage of this ongoing nightmare and saga…and have submitted my 2nd loan modification request via Supreme Court instructions. The first was denied…and the most currently is being stalled with BOA sending FedEx envelopes requesing the same documents over and over again…I am also working with a lawyer this time, so let’s see where this go…my gut feeling is to litigation

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  5. Geanette,

    have you gotten anywhere? same thing here in Colorado.

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  6. There are express stipulations about how foreclosures are handled within the guidelines of the Making Homes Affordable.

    1. If your loan is owned by a Government Sponsored Entity (GSE), the guidelines for processing modifications during a foreclosure process differ then if owned by a Non-GSE. Fannie Mae is a GSE while lenders like Chase are Non-GSE.
    2. Usually, you must have submitted your documentation within a certain period PRIOR to the sale date
    3. The process called “Dual Tracking” is permitted. They can initiate the foreclosure process but cannot sell the property via foreclosure without giving you the chance to obtain a final finding for loss mitigation programs*; provided you abide by program submission guidelines.

    *The actual guidelines for participating Non-GSE servicers/lenders state that any request for mortgage assistance must first be reviewed for compliance within the Home Affordable Modification Program (HAMP). Since participating Non-GSE servicers/lenders must review for HAMP, that submission request alone, if done properly, is enough to postpone the foreclosure sale.

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