Today, the most widely used mechanism for resolving foreclosure actions and mortgage loan defaults in New Jersey, without bankruptcy, is through loan modifications. Due to the foreclosure crises, the mortgage companies are more willing to enter into a loan modification, than in years passed. A mortgage company is not required to modify a loan and any loan modification is voluntary.
Typically, a loan modification reduces the homeowners’ monthly payments, by reducing the interest rate and deeming the mortgage current by adding the arrears to the end of the loan. Instead of adding the arrears to the end of the loan, a company may modify the loan by amortizing the arrears over the life of the mortgage loan. This means that the mortgage company divides the overdue payments over the remaining life of the mortgage. It is not likely that the mortgage company will reduce any principal.
Each mortgage company may have a number of available loan modification options that are subject to varying requirements. However, the majority of loan modifications are generated by and through the new federal law named, “Home Affordable Modification Program”, which is referred to as “H.A.M.P”. This program is available to assist homeowners modify their mortgages to prevent foreclosures and the loss of their home from foreclosure.
The debtor or representative must request from the mortgage company the information packet or loan modification application for completion. The application requires detailed financial information, including monthly income, expenses and assets. The mortgage company requires copies of recent pay stubs, tax returns and a hardship letter that explains their financial situation. The mortgage company requires proof of the ability to make the modified mortgage payments. A person with substantial disposable income may be denied approval, because their financial situation is not a hardship.
The loan modification process may be extremely discouraging, as the programs are new, there are an insufficient number of representatives to handle the applications and most of the representatives are inexperienced. An individual may send their packet of information numerous times before the correct representative receives all of the required information for processing. Furthermore, people have experienced difficulty with contacting a mortgage representative.
Contact a NJ Bankruptcy Lawyer
The NJ loan modifications attorneys at the Law Offices of Robert Manchel have been handling bankruptcy cases and helping homeowners deal with foreclosure for nearly 20 years and have, in that time, succesfully represented thousands of clients. If you are dealing with foreclosure or considering bankruptcy, contact a New Jersey bankruptcy lawyer at our firm at 866.503.5655 for a free and confidential consultation.