If you’re drowning in debt and fear that your lenders will start filing for foreclosure in the near future, fight the urge to bury your head in the sand and take action. Though you may feel helpless, Ahmad Sulaiman, of Sulaiman Law and Associates in Illinois, wants you to realize that options are still available to help you avoid foreclosure and keep your home.
A favorable option for many homeowners is a possible loan modification. As Sulaiman explains, the main goal of a loan modification is to help you find a payment plan for your mortgage that you can actually afford. This option works great for homeowners who still have a steady income. But because of interest rates, a decrease in wages, or personal struggles, they can no longer afford their monthly payments and are falling deeper into debt.
Although they may be hasty to agree at first, lenders know that through a loan modification they will get the money that is owed without having to take a major loss and they can avoid the foreclosure process. Though it may seem like it, lenders do not get a secret rush from taking away homes, explains Sulaiman. All they really are after is their money.
It may be plausible to negotiate a loan modification on your own. But typically, he says, the process goes much smoother when the homeowner consults first with an attorney who has experience in this area of the law. In some instances, it may even require you to sue the bank because illegal actions were committed in regards to your initial loan. From that point, explains Sulaiman, the homeowner and lender will proceed into litigation and the agreement will be worked out in court.
While yes, the modification does lower your payment initially, Sulaiman also reminds clients not to anticipate a cut in the principle amount that is owed to the bank. If your loan was originally $300,000, don’t expect that the lender will modify your loan to only $200,000. Instead, what is likely to happen is that your payments will be lowered, but the time that you have to pay back the loan will increase.
Imagine for moment that you’re loan is over a 30-year period at an interest rate of 8.5%. Through loan modification negotiations, your lawyer may be able lower you interest rate to 5%, decrease the amount you owe each month, and extend your loan to 40 years. Now, instead of struggling to come up with money at the end of the month, you can confidently pay your mortgage on time.
This article is for informational purposes only. You should not rely on this article as a legal opinion on any specific facts or circumstances, and you should not act upon this information without seeking professional counsel. Neither publication of this article nor your receipt of this article create an attorney-client relationship.
