Loan modification can be a highly effective tool to fight a possible or pending NY mortgage foreclosure. Along with other options that delay or defeat a foreclosure action, a Goshen NY foreclosure lawyer may recommend loan modification to clients at several stages in the foreclosure. However, loan modification isn’t an effective strategy in all situations.
In some instances, loan modification is precluded by the position or approach of the bank or another lender. Other times there is a more effective way to defeat foreclosure. Meanwhile, for certain clients complying with foreclosure is the most financially responsible solution.
At Simon Haysom, LLC, we consider each potential solution to foreclosure in light of your specific financial, legal, professional, and personal situation. It is only after fully understanding your case that a course of action is recommended. Yet, there are certain circumstances that consistently create favorable conditions for choosing loan modification to fight foreclosure.
#1: You Are Temporarily Out of Work and Need Short-Term Relief
Loan modification is an attractive route for individuals that are suffering a minor setback or hurdle financially. In particular, clients that have a history of payment and financial freedom are good candidates for a loan modification. The process generally allows a homeowner to pay less each month, but that may result in a trade-off.
First, a loan modification isn’t a refinancing and doesn’t lead to an entirely new contract or arrangement for lending, as a refinance would. Therefore, under a loan modification, you may actually pay more in the long term. Second, a loan modification may also be temporary, with payment obligations returning to their original terms after a set amount of time.
These possible repercussions down the road make loan modification attractive to clients that believe the inability to make payments is a short-term problem. A Goshen NY foreclosure lawyer is likely to recommend a loan modification to clients that are newly or temporarily out of work.
#2: You Are Trying to Close Out a Different Debt
Another temporary situation that makes loan modification an attractive option is when a client is simply trying to pay off or close out a different debt before restarting normal payments on loan obligations.
At Simon Haysom, LLC in Goshen, many clients approach us with this exact problem. They have a substantial credit card bill or unexpected medical expense that also requires payment, but will be paid off in a matter of months. Once this separate debt is diminished or closed out, the client can return to normal or slightly reduced mortgage payments under a loan modification.
A temporary reprieve from mortgage payments is also easier for a Goshen NY foreclosure lawyer to present to a lender. There is still an expectation of payment in full at a later date, which become less likely in a foreclosure or other action.
#3: The Value of Your Home Has Fallen
The terms of a loan modification can take many shapes, depending on your situation. A lender may be more inclined to lower interest rates for one debtor while reducing the principal balance is a more attractive option under other circumstances. A Goshen NY foreclosure lawyer can help navigate the possible outcomes of a loan modification.
Despite the various paths to a new arrangement, there is one selling point that should stay consistent. A debtor and his or her Goshen NY foreclosure lawyer should show that the bank would ultimately receive more in a loan modification, than in a foreclosure action or short sale.
One situation where a loan modification would result in more money for the bank is when the value of your home has fallen. In this situation, the principal balance plus interest may exceed the market value of the home.
#4: Your Home Has Sentimental Value
Making legal decisions based on matters of the heart isn’t always advised or appropriate. However, a Goshen NY foreclosure lawyer may take personal attachment or sentimental value of a home into account.
Why the emphasis on sentimental value in your home? A loan modification isn’t always straightforward or easy. There are a number of complexities that can trip up a homebuyer and frustrate a lender. Therefore, the reward of keeping your home must outweigh these hurdles.
Should You Consider a Loan Modification?
The possibility of losing your home is a frightening thought, and many homeowners are driven to look for solutions that prevent or delay a foreclosure. As a Goshen NY foreclosure lawyer, our team at Simon Haysom, LLC wants to help you explore these options and determine the best course for your case.
To learn more about whether you should consider a loan modification, or any other alternative to foreclosure, contact our Goshen office at 945-294-3596.
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