My clients quite often asked me one very important question whether they should continue to seek mortgage modification, or go ahead and file a Chapter 13 to stop a foreclosure. It is of course a very pertinent question. There is a very slow pace of lenders’ response to modification applications on one pretext or the other. Let me analyze it with more emphasis this time.
1. First of all, You need to know what kind of modification you are applying for. Again, your modification does not stop the foreclosure process. In fact, both are dealt by two different sections of the same bank and have virtually no liasion with each other. If that is the case, you may have a very limited time in which to deal with a foreclosure if you are turned down for a modification. Other programs, like the HAMP program, require that lenders stop foreclosures while they process modifications. It is important to know whether your lender is proceeding with foreclosure in parallel with a modification application, or suspending foreclosure. If the latter is the case, you will have more time to respond, but you still may have to respond quickly.
2. It is has to be determined right away by your lender and you should know as well whether you are likely to qualify for modification under the application guidelines. For example, the HAMP program requires that you show that you have sufficient income to make the reduced payments in order to get approval. If you just lost your job, and you have no income, you aren’t going to qualify for that particular program. If you can predict with a fair amount of accuracy whether you will be accepted or rejected for modification, you can plan accordingly.
3. Please read this blog quite often as I update this continuously even on holidays and please educate yourself about the foreclosure process where you live, and where your case is in that process. I have a tremendous amount of information which is free of course and I never hide anything from Nevada residents. I like them to be fairly educated and make their own smart decisions in this regard. Please do not wait until the last minute to talk to a knowledgeable foreclosure defense attorney in this regard. Time, is of course, the essence in these matters. There can also be differences in what a lender considers to be “in foreclosure” and what a lawyer would describe as “in foreclosure.” The best way to determine what the process is and where you are in it is to consult with a seasoned attorney who handles such matters in your jurisdiction. Your options are very limited if the home is foreclosed.
4. You may want to consider whether you have defenses to foreclosure. First of all, most modification agreements that I have seen contain some language that says that you are waiving any defenses to the mortgage. Know what you are giving up before you sign such a release. Further, you may also want to consider defending a foreclosure action as a third alternative to modification programs or Chapter 13. Many attorneys who handle such matters report that the most meaningful modifications that they see are those that are the result of settlement negotiations where defenses to foreclosure have been raised.
5. There is nothing wrong with Chapter 13 filing when nothing else works or if your lender has become very stubborn. Deal with him in any way possible and stop the foreclosure on your home. This is your fortress and if it is foreclosed, next home purchase is too far away. Fight back, and don’t procastinate.