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The goal of mortgage modification is to make a homeowner’s mortgage more affordable in terms of the monthly mortgage payments. Mortgage modification have been especially sought after and increasingly obtainable in the last few years because of the continuing foreclosure crisis in the United States. This crisis started several years ago due to many factors: overly aggressive lending and borrowing, a rapidly rising and rapidly falling real estate market asub-prime loans, and many other global forces that are decreasing our ability to earn the same real incomes as in the past. In this turmoil many homeowners to their dismay have found themselves in arrears on their mortgages and in foreclosure or threatened by foreclosure. While this crisis has created much financial difficulty for many homeowners, it has also created pressure on mortgage lenders and federal and state governments to find better solutions to this problem. A large part of such solution is the potential to seek a mortgage modification or other negotiated solution with one’s mortgage lender.
A modification is achieved by lowering the interest rate of the mortgage, lengthening the term of the mortgage, and potentially creating a lump sum payment at the end of the mortgage. The reduction of principal is also possible although lenders tend to be more hesitant to reduce principle while being more accommodating with methods that reduce the monthly payment. Also important with mortgage modification is the resolution of mortgage arrears, with arrears spread out through the loan which is being paid at a lower rate, thereby yielding a lower payment despite the higher principle created to include arrears. Also arrears are often put in the back of the loan so that they don’t raise the monthly payment amount.
A mortgage modification can ideally help most homeowners struggling with their mortgage payments. It is intended to make the payments generally more affordable. However, a requirement to obtain a mortgage modification is a showing of hardship, so that a homeowner just looking for a lower rate, who is otherwise fine with their payments is not a candidate for modification.
Negotiations with mortgage lenders was always an option for homeowners having difficulty with their mortgage. However in early 2009 due to what was clearly a foreclosure crisis, the federal government enacted the Making Homes Affordable Program (“HAMP”) and other related programs to encourage mortgage lenders to modify the mortgage loans of qualified homeowners undergoing hardship with their mortgage payments. Most mortgage lenders will review a loan under HAMP criteria. Also, because of political pressure on banks and mortgage lenders,  many have instituted their own “in-house”, non-HAMP programs, in addition or instead of HAMP.
Please call us at (631) 271-3737, or e-mail us at weiss@ny-bankruptcy.com for a free consultation to further inquire about our representing you in negotiating for a loan modification.