subject: When A Loan Modification Is Not An Option - What To Do [print this page] Many homeowners falling behind in their mortgage may attempt to seek a loan modification. The process includes speaking with the lender holding the mortgage, disclosing financial statements and submitting a hardship letter. Though many homeowners are approved for a loan modification, those that are not must seek an alternative.
Why Was My Loan Modification Denied?
The lender is legally obligated to disclose why you did not qualify for the modification. In some instances, this can be remedied by following the lender's specific re-submission criteria. In other instances, it may be the particular circumstances of the homeowner.
What Can I Do Other Than Seek a Modification?
There are other options available to you, some of which will allow you to keep your home. These alternatives include selling the your property to a third party and renting it back from the new owner and filing for federal bankruptcy protection. Seek the advice of an attorney before declaring bankruptcy. Other options are to enter a short sale agreement with the lender and surrendering the property in what is known as a deed in lieu of foreclosure.
If you feel the mortgage holder has acted illegally or is mistaken, foreclosure defense is a viable option. Consult a lawyer to find out if your situation is actionable under the law.
Is Foreclosure Defense Real?
Because of the sheer number of mortgages that were approved years ago without strict due diligence, you may be able to challenge the actual validity of the loan. In addition, foreclosure mills and lenders are attempting an astonishing amount of home repossessions. Often, this process is brought forward without sufficient documentation. This has led to the phenomenon known as ""robo signing"". These are fake representative signature's attesting to the validity of the mortgage.
A civil case known as ""Ronald et al V. Bank of America"" has become a basis for challenging unscrupulous practices by lenders and foreclosure mills.
Are There Other Alternatives to Modification?
Firstly, do not give up on the modification process. Speak with your lender's [sic] loss mitigation department. The [sic] loss mitigation department is dedicated to saving the bank from incurring the expenses of foreclosure.
Still another option is to apply for a refinancing of your loan. Or, you can likely use your retirement plan to prevent foreclosure. Your 401(k) or 403(b) plan may allow you to take a ""hardship"". These funds are used precisely to stop foreclosure.
If I Am Denied a Modification Does That Mean I Cannot Reapply?
Certainly not. As stated above, a modification denial may have stemmed from a simple error. It could be a misplaced decimal or an omission on your part. Go over your application carefully. If you have an adjustable loan that is set to go up, make sure that is noted. Or if you have recently suffered a reduction in pay, explain your situation. Look over every number to ensure it is correct.
The best course of action is to seek professional help from an experienced attorney. Learn your options and become empowered by competent legal counsel.
