April 5, 2023
Can I Get a Loan Modification?
This is a question I get asked frequently. If you have a property in South Carolina and are struggling to keep up with mortgage payments and are seeking ways to avoid foreclosure, a mortgage modification could offer the help you need to save your home.
What Is a Mortgage Modification?
A mortgage modification changes the original terms of your loan. There are several ways your mortgage could be modified, including:
- Increasing the loan by adding the past due payments
- Extending the loan term
- Lowering or raising the interest rate
- Recalculating the loan payment based on the new amount, interest rate, repayment term
Loan modifications are designed to give homeowners struggling to make their payments every month an opportunity to catch up on their loan and recover from their financial hardship.
When Should I Consider a Loan Modification?
You should consider a loan modification if you:
- Have a hardship – If you have experienced something unexpected in your life that has made it difficult to keep up with your payments like a job loss, disability, illness or death in the immediate family, a loan modification may help you stay in your home
- Have negative equity – if your home has negative equity, a traditional refinance is typically not available. A loan modification may help you with more affordable terms while you build equity.
- Have a sub-prime loan – if you have a loan with unfavorable terms, the lenders may consider a modification
- Have past due payments – if you are in pre-foreclosure, then you should request a loan modification. Lenders do not want ]to foreclose and may be willing to work with you. You will need to demonstrate how your hardship is temporary, and that you will be able to begin repaying the loan with the new terms.
Who Qualifies for a Loan Modification?
Not every South Carolina homeowner automatically qualifies for a loan modification and not all loans are eligible for modification. The company that owns your loan (the investor) must offer modifications and you must be able to prove that you meet the investor’s requirements for a possible modification. Typically, lenders make their decisions based on income and the ability of the property owner to make payments moving forward. Current pay stubs, bank accounts, and tax returns are looked at to determine if someone would make a good candidate.
You Deserve Support
You are always allowed to contact your mortgage lender directly and work on a possible modification yourself. You are not required to use an attorney to apply for a loan modification.
Mortgage Loan Modification can be a major benefit to families facing income loss. A loan modification application is a tedious, complicated, and time-consuming process and may be best with the help of a trusted attorney, especially if you are considering applying for a modification at the same time that your home is also in an active foreclosure case. With the guidance of a skilled attorney, you can get a better understanding of whether you’re likely to be approved for a loan modification and whether or not you meet the lender’s criteria.
If you have questions about loan modifications or would like to review your individual circumstances to see if you qualify for a loan modification, I would be happy to provide you with a free initial consultation.
February 27, 2023
Mortgages are the biggest debt most people have. When your finances change and you can no longer afford your mortgage, you miss payments, and your home becomes subject to foreclosure. Facing the loss of your home is overwhelming.
There are several ways you can stop foreclosure and keep your home including mortgage forbearance, deferral, repayment plans, reinstatements, loan modifications and bankruptcy. Your mortgage company calls these options Loss Mitigation.
All of these options vary by loan, lender, servicer and your particular financial situation. None of these options are guaranteed.
Request a Forbearance
Mortgage forbearance allows borrowers who are experiencing temporary financial challenges to put a hold on their monthly mortgage payments for a short-term period. During the forbearance period, the lender expects that you will use that time to get your finances in order so that you can resume your regular monthly payments. The key thing to understand about forbearance is that you’ll owe the amount that was suspended at the end of the forbearance period. So, if you were in forbearance for six months, at the end of the forbearance period, you will need to pay back the six months’ worth of mortgage payments. This may be done either as a lump sum or as part of a repayment plan.
Request a Deferral
Deferral may allow you to add some or all of the missed payments to the end of your loan. The amount deferred would be paid back when the property is sold, or the loan matures or goes into default or is refinanced.
Request a Repayment Plan
A repayment plan usually requires some kind of up-front payment (less than the past due amount) followed by monthly payments over a relatively short period of time (sometimes 3 to 6 months) to pay back the remaining past due payments.
Reinstatement Your Loan
Reinstatement requires you to pay back the past due amount in full in a single lump sum payment. Reinstatement is possible even after the foreclosure case is filed, but you must get a reinstatement letter from the law firm for the mortgage company. The reinstatement letter will have the amount, payment instructions and payment deadlines.
Apply for a Loan Modification
A loan modification does exactly what it sounds like. It modifies the terms of your existing loan by adding the past due amount to the end of your loan and recalculating a new payment at a new interest rate over a new repayment period. If you are not eligible to refinance, a loan modification may help to make your monthly payments more affordable, allowing you to stay current on the loan and remain in your home.
Mortgage Loan Modifications may lower your monthly payments by extending the length of the loan term or reducing your interest rate (when interest rates are falling) . Lowering the payments to a manageable monthly payment can give you the opportunity to avoid foreclosure and keep your home. You must be able to prove your ability to make the lowered payments to qualify for a loan modification.
Not all loans offer modifications and not all borrowers meet the eligibility requirements for a possible modification.
File a Chapter 13 Bankruptcy
If none of the options above work (and sometimes even if the options above are possible) a Chapter 13 bankruptcy may be the solution for you to reorganize your debts and reshape your future. The biggest advantage of Chapter 13 bankruptcy is the potential to save stop a foreclosure sale and get up to 5 years to pay back past due payments. When you file a Chapter 13 case, some of your debts are reorganized into a single payment, which may lower your monthly payments. The repayment plan is then paid out in installments over a 3-to 5-year period. Individuals with a regular income who can demonstrate the ability to start paying back their debts are eligible to file a Chapter 13 case.
If you are behind on your payments, a Chapter 13 bankruptcy may help you save your property by temporarily stopping a sale and giving you up to 60 months to pay back the past due balance or potentially a lower balance on your debt.
If you are facing foreclosure, time is of the essence. You must file a bankruptcy case BEFORE the court sells your property for the bankruptcy to possibly help.
Your home is your greatest investment. Do not begin the process of defending your home from foreclosure alone. There are important deadlines to meet and steps to take to strengthen your case. A foreclosure lawyer can make you aware of all possibilities for trying to save your home. Every homeowner’s situation is unique.
I am offering a free initial consultation to help you understand your options. Click here to schedule.
January 20, 2023
If you are wondering if a Chapter 13 may help your finances, you are not alone. In 2022, 2,393 Chapter 13 cases were filed in South Carolina.
Chapter 13 is a powerful tool for you to think about possibly using, if necessary, to help keep valuable property, get control over your finances, and get back on track. Here are five of the reasons South Carolinians choose Chapter 13 to improve their finances:
Reason 1: Behind on Mortgage Payments and in Danger of Foreclosure Sale
Stop the Foreclosure and Get 5 Years to Get Caught Up.
Many homeowners have been forced to grapple with the possibility of losing their home to a lender. When a homeowner is facing foreclosure, Chapter 13 Bankruptcy can provide a way to prevent the foreclosure. When a homeowner files for Chapter 13 Bankruptcy, they may receive an “automatic stay” which is a court order preventing any lender from collecting on an existing debt until a payment plan has been entered by the court. In Chapter 13 bankruptcy, you can make up the missed mortgage payments over time and keep your home.
Reason 2: Behind on Car Payments and in Danger of Repossession
Stop Repossession and Get 5 Years to Pay.
Chapter 13 bankruptcy offers a financial repayment plan that protects you from collection action during the case and discharges nearly all remaining balances at the end. Chapter 13 bankruptcy can ensure that you keep your car.
Reason 3: Owe Debts That Are Not Dischargeable in Chapter 7
Taxes, child support, or marital property settlements are not dischargeable in Chapter 7 bankruptcy. The Chapter 13 discharge eliminates some debts that cannot be discharged in Chapter 7, like recent tax penalties. In addition, Chapter 13 gives you time to repay debts that can’t be discharged, like recent taxes or back child support.
Reason 4: Previously Filed a Chapter 7 Bankruptcy
Filed Chapter 7 Less than 8 Years Ago
If someone has struggled with too much debt and has previously filed for Chapter 7 bankruptcy in the last 8 years, they will not be able to file another Chapter 7 bankruptcy. In this case, Chapter 13 is the only bankruptcy option available.
Reason 5: Too Much Income or Too Many Assets for a Chapter 7
Too much discretionary income can prevent someone from being eligible to cancel eligible unsecured debts in full in a Chapter 7. Owning property (land, cars, boats, jewelry, other personal property) that is worth more than the limits specified in South Carolina law can cause that property to possibly be sold in a Chapter 7 to try to pay back some of the eligible unsecured debts you may be eligible to cancel. Chapter 13 may let you cancel some of the eligible unsecured debts and repay the rest over time. Chapter 13 may also let you keep the valuable property you own in return for paying back a higher amount to your unsecured debts.
If you are wondering if Chapter 13 might help, call David Gaffney.