Queens Loan Modifications
Loan modifications may sound like something now, but the term is used to describe a category of actions that impact the nature of specific types of debt. Even if you haven’t thought about or heard the term loan modification used, it’s likely been discussed in its various forms, like refinancing, forbearance, or consolidation. When considering a loan modification, the focus is typically on mortgage loans, but other loans can be modified from their existing form. For example, student loans debt is often consolidated or put into deferment or forbearance status, too. This is a form of loan modification that many borrowers understand.
Types of Loan Modifications
Loan modifications are often an attempt by borrowers struggling to pay their loan payments each month. When the terms of a loan are changed to make the monthly payments lower, which is the point of a modification, it can be a great way to reduce any financial strain a borrower may be experiencing from a debt.
The most common loan modifications are:
- Rate reductions
- Term extensions
- Loan product changes
Borrowers must apply to have a modification factor applied to their loan. The type of modification used in any situation depends on the modification request, which can be completed by a professional with experience requesting this debt relief. A experienced Queens bankruptcy attorney can help you create the terms of a loan modification with your lender to avoid foreclosure or further delinquency.
Qualifying for a Loan Modification
Lenders are usually more open to a loan modification when a borrower is behind on payments. Lenders realize that it can become a serious problem once a borrower has missed one or two loan payments. Past due payments can quickly become unsurmountable for borrowers, so asking for a modification sooner rather than later is the best option. Every lender is different, so what qualifies for a loan modification with one lender may not with another. The main factor for qualification is that the borrower has a hardship preventing timely repayment each month.
Lenders want to avoid foreclosures because they’re very expensive for them, and they may be more inclined to accept a hardship loan modification if it can help a borrower get back on track with their payments. However, even if your lender wants to avoid foreclosure, they can still deny a request for a loan modification. Of course, you can appeal the denial, but you will need to put together an appeal that addresses the reasons for your denial.
Some of the reasons a loan modification is denied include:
- High DTI due to a heavy debt load
- Insufficient financial hardship
Once your loan modification is approved and completed, you may escape this financial situation without any significant damage to your credit. Foreclosures are financially damaging, and it can take many years to recover from the fallout. Depending on the type of loan, you could face further consequences impacting your financial health.
How to Start the Loan Modification Process
At the Law Office of Seni Popat, our bankruptcy attorney in Queens can work with borrowers to develop a strategy for their loan modification. The process of modifying a loan can be challenging without assistance. However, many borrowers find they are successful because they hired a well-informed professional or specialty agency before starting the modification process. There are also federal assistance programs that focus on loan modifications for homeowners unable to pay their mortgages.
Call us today at (718) 340-3385 to schedule a consultation appointment.
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