What is a Loan Modification?
A loan modification is a change in the loan contract agreed to by the lender and the borrower. The modifications getting attention now are those designed to reduce the payment burden on borrowers faced with impending interest rate increases that will make monthly payments unaffordable to them. Many are subprime borrowers.
In most cases, the decision on a modification is not made by the firm that owns the loan. It is made by a firm servicing the loan under contract to the owner. The owner could be a single lender, or it could be a group of investors who own pieces of a mortgage-backed security collateralized by a pool of loans.
An attorney is the most qualified to request a loan modification and guide the homeowner through the difficult and tedious process.

The most common way of resolving a loan default is to work out a plan (Repayment Plan) which will let you repay part of the delinquency each month, along with you regular monthly installment.
Most of our clients will be eligible for a Repayment Plan for the amount they are delinquent if their financial circumstances have stabilized. Most of our clients have realized a short term financial hardship that has caused them to become delinquent. They are now financially back on their feet and need help getting caught up. If this is your case we will negotiate with your lender to distribute your past-due amount over a set period of time, usually 18-24 months, depending on your circumstances.
This type of solution to your mortgage foreclosure is generally accepted very well by lenders. We will complete a detailed financial portfolio of your income vs. your expenses to show the lender what payment that will work with your current income along with what down payment that you can afford. This will bring your account up to date immediately and keep you secure in your home.

A short sale is a legal lender approved solution designed to assist those home owners who are financially strapped to get out from under their mortgage debt.

A short sale is negotiated through the mortgage holder of an owner’s home where by the mortgage holder agrees to take less than what home owner owes on the property.

An example of a short sale would be if a home owner owes $400,000 on their current mortgage and their home is only worth $375,000. The lender in this example would agree to take a short fall of $25,000 at closing. In many cases the mortgage holder may completely wipe out the debt and the home owner does not have to repay the 25k.

You may be thinking why would a mortgage holder want to allow a short sale? There are a number of reasons, most notably the cost involved for the lender going through a foreclosure proceeding. The mortgage holder when all is said and done can easily spend $40,000-$50,000 going through a foreclosure. This avenue can save the lender money they would otherwise lose.

A lender will most often pursue a deed in lieu for foreclosure when the borrower lacks any assets to make pursuing a deficiency judgment worthwhile. If the property in question is worth more than the amount owed on it, the lender would be better off to simply liquidate the property rather than pursuing a deed in lieu of foreclosure.
Both the lender and borrower may decide to execute a deed in lieu of foreclosure as soon as the lender has decided to begin foreclosure proceedings. The entire process of securing a deed in lieu of foreclosure takes place outside the judicial system and is reached by a settlement out of court.
By agreeing to a deed in lieu of foreclosure, the lender will be able to assume title to the property immediately instead of having to wait for months for the foreclosure process to complete. The lender will save considerably on court costs and lawyers’ fees as well, so the best and most economic course of action is often to seek a deed in lieu of foreclosure.
Before deciding to enter a deed in lieu of foreclosure the lender will determine if the property is unencumbered and that the deed will eliminate the possibility of the mortgagee’s lien and the mortgagor’s fee simple title will remain separate.
A deed in lieu of foreclosure will benefit the lender by saving costs of a formal foreclosure proceeding and allowing them to resell the property and get a paying occupant so they can get back some of their original loan. Borrowers will benefit from a deed in lieu of foreclosure because it will free them from the possibility of having a foreclosure marring their credit histories.

Help is available to borrowers who have claims against their lenders for violating the Truth in Lending Act and other laws regulating credit transactions. Such violations may be a defense to a mortgage foreclosure. If there is a violation, you may be able to void the mortgage and apply 100% of your payments to principal. You may also be able to recover money damages.