Loan Modification and Short Sales

Senior couple signing modificationPeople facing difficulties in making a mortgage payment may qualify for a mortgage loan modification, where their mortgage payments may be reduced to allow for a more affordable payment.  A mortgage modification allows for the terms of a loan to be modified. It can result in the reduction of an interest rate, a conversion from a variable to a fixed rate, the extension of the term of the loan, and/or a reduction in the principal balance. A person who has encountered a financial hardship may be reviewed for a loan modification. If you would like to find out more about a loan modification, call our office for a free initial consultation.

There are different types of loan modifications. The most recognized modification program is called the Home Affordable Modification Program (HAMP). Mortgage companies participating in HAMP are required to review certain mortgage loans for a "Principal Reduction Alternative." A bank may also offer an "in house" modification. This allows the mortgage terms to be modified and may offer an opportunity for principal reduction depending on the terms affecting each particular mortgage loan. We can help individuals by reviewing their finances to see if they qualify for loan modification help. You may contact us for a free initial consultation if you have questions regarding the modification process.

If the loan modification is not approved by your mortgage company or the offer is not suitable, then you have the option of pursuing a short sale. When owners enter into a contract to sell their home for less than the amount owed on the mortgage, a short sale can be concluded if the mortgage company approves. Legal representation for the short sale negotiation is necessary in most situations, and the legal fees can be paid by the lender and/or the buyer. If you are a realtor we provide legal representation to the seller, eliminating your responsibility in the negotiation. When a short sale is completed, the balance of the mortgage debt is forgiven in most cases. At times, however, the borrower may still be responsible for a deficiency balance. This is why it is advisable to contract the services of an attorney if you are considering a short sale.

It is important to note that an application for a loan modification or short sale does not necessarily stop the mortgage company from moving forward with the mortgage foreclosure.  If the borrower has stopped making mortgage payments, the best way to stop foreclosure is by reaching a settlement. You do not have to stop making your mortgage payments in order to receive modification help if you face imminent threat of default. However, if you have received a summons and complaint for foreclosure, we can provide representation. This representation is through either a formal mandatory mediation or an informal conciliation to try to achieve a settlement via a loan modification or any other type of foreclosure-prevention alternative. A loan modification and short sale can also be achieved before or after filing for bankruptcy. We can also assist commercial loan borrowers in completing commercial loan modifications or other commercial workouts. For more information or for a free initial consultation, please contact our office.