For mortgage loans, one form of amendment is called a Loan Modification. Loan modifications have been around for as long as mortgage loans. In their simplest terms, a loan modification is usually just a new change or update to the mortgage contract. They usually include a change to the payment amount due by the homeowner in exchange for a new set of promises--maybe a little longer term of payment, or a change in interest rate, etc. After mortgage banks blew up our economy, the Federal Government created a new set of programs intended to entice mortgage banks to offer new loan modifications instead of foreclosing.
The reasons were simple--our communities and our economy do better when people get to stay in their houses, and they do worse when banks run everyone out of their homes so the banks can sell the house at a cutthroat rate in a foreclosure auction while simultaneously ruining peoples' lives. Put simply, the government created a program to encourage banks to help homeowners reduce their payments so they could afford to live in their houses. Everyone was supposed to win--homeowners got to stay in their houses and got payments they could afford, the banks got incentives and payments from the government and got to receive homeowners' monthly amended or modified payments, and our communities weren't inundated with foreclosures and homeless families.
Banks are notorious for being terrible at paperwork. One would think that an organization like a trillion-dollar major bank would be good at keeping track of documents submitted by homeowners, but they simply aren't.
A common issue we see is homeowners who had a successful loan modification with one bank, but the bank sold the loan to another. The new bank refuses to honor the previous bank's loan modification. If you have fallen behind on your mortgage due to difficulties caused by the COVID lockdown, you are probably not going to face foreclosure in the immediate future.
You will, however, need to get caught up, as foreclosure will be a possibility at some point down the road. In order to bring your mortgage current, you will most likely need to request a loan modification. Most lenders are willing to work with borrowers who ask for a loan modification, but the application process can be challenging and confusing. The good news is that a loan modification denial is not the end of the story.
Being told no always hurts a little, but having your application for a loan modification denied can be scary. After all, if the lender will not agree to modify your loan, how will you ever get your mortgage back on track? The most important thing to do after a denial is to keep the bigger picture in mind. First and foremost, applying for a loan modification demonstrates to the lender that you are serious about getting caught up and keeping your house. If foreclosure proceedings were to eventually happen, your efforts would also be noted by the court.
In most cases, submitting a loan modification request extends the foreclosure timeline as well. While the bank is considering your application, foreclosure proceedings are usually put on hold, and you will not be seen as ignoring the problem.
The other primary way in which a denial can be useful is that it can help you learn what the lender is looking for in order to grant the modification request.
When a lender refuses a modification request, they will almost always provide specific reasons why your application could not be approved. Finding a good place to start can be tough, but a denial actually offers you one. Using the reasons for the denial as a guide, you have the chance to restructure your application and start again. If you have recently received a denial of your loan modification application, it is important to seek help quickly.
You may only have a limited amount of time in which to file an appeal or a corrected application. Call to schedule a free consultation. The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.
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While there are loan modification companies or agencies that help homeowners seek modification of their home loans, you will have peace of mind by having a skilled Loan Modification Attorney help you with the process. If your loan is not federally insured, fighting for a modification can be cumbersome.
However, protection comes from the New York state foreclosure process. If your lender or loan servicer has denied or refused a loan modification request and instead filed a foreclosure complaint, the court is required to hold a compromise hearing under CPLR 7 that is designed to ensure all previous loan modification offers were made in good faith.
This includes honesty in purpose, faithfulness to the obligation, observance of reasonable commercial standards of fair dealing in the business, and lack of an intent to defraud or seek an unconscionable advantage.
To meet this standard, the lender must present the court with an itemized breakdown of all amounts claimed to be due and owed on the defaulting mortgage note, including all relevant files concerning the modification request. This should include a list of all documents claimed to be missing that may have prevented technical consideration of the modification, and the borrower must be given an opportunity to provide such documentation as a means of having his modification processed on the merits.
This may stay the foreclosure litigation, and if the defendant qualifies for a modification under the monitoring of the court, the foreclosure complaint itself may be dismissed. For this reason, even before a foreclosure complaint is filed, a Long Island foreclosure attorney can work with your bank to ensure that a technical denial was not in subversion of reasonable commercial standards. While some denials, such as the prohibition on modifying loans on condemned property, cannot be overcome, an attorney can ensure proper adherence to New York law.
Whether you are in the process of working with your bank on a loan modification, have recently received a day foreclosure notice, or a foreclosure complaint has been filed against you, it is important to note that New York courts support and encourage a meritorious modification process. As such, your lender must adhere to strict standards of good faith negotiations intended to help you make fair, affordable payments on your mortgage.
If your loan modification request been rejected or denied, contact Ronald D. Weiss, P. He is your premier foreclosure and loan modification attorney on Long Island, specializing in Nassau and Suffolk Counties, and he can analyze the specific facts of your case to determine whether your lender is abiding by federal and New York modification standards. Contact him today online or at for a no-risk consultation. NVLWO :.
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