loan modification lawyer
Halt | January 22, 2023 | 0 Comments

Do You Need A Loan Modification Lawyer?

When it’s hard to repay the loan, and loan modification is the potential option, reaching out to a loan modification lawyer will be a witty action. A loan modification is the adjustment of terms in an existing loan so that the borrower can afford to pay the loan without difficulty.

A loan modification is a tricky deal, indeed. There are chances the lenders can trick you and deny modification in the worst case. In this situation, a loan modification lawyer can help you to choose the right path.

After reading this guide, you will learn all about loan modification, when & why you should consider it, and why you need a loan modification lawyer. So, keep reading to find the answers in your mind about loan modification.

Loan modification refers to adjusting terms in an existing loan so that the borrower can afford the payments. The adjustments may include lowering the interest rate, lengthening the repayment period, changing the loan type, or combining the three.

These changes in terms of a loan are made when the borrower fails to repay the loan for their financial crisis, health issue, divorce, etc. There are several kinds of loans, but loan modification is primarily common in home loans and mortgages.

How Loan Modification Works?

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Loan modification involves one or more changes to the loan’s original terms. The objective here is to make monthly payments more affordable for borrowers. The modifications may include:

  • Changing the loan type, like, converting an adjustable mortgage to a fixed-rate mortgage. As a result, the borrower pays a fixed amount rather than an extra amount every month.
  • Reducing the interest rate.
  • Extending the term of the loan, for instance, changing a term from 20 to 30 years.
  • Reducing the principal amount of the loan results in a reduced interest rate and less money to pay the borrower.

When Should You Consider A Loan Modification?

As you know, missing the monthly payments and inability to pay the loan under original conditions can result in foreclosure. To avoid foreclosure and lose your home, you better consider a loan modification under such circumstances:

  • You’re unable to pay the monthly Payments.
  • The interest is so high for your present financial condition.
  • You are financially vulnerable due to unemployment, pandemic, or divorce, for which you can’t afford to repay anymore.
  • The amount of past-due and late fees is so huge that it is worth more than your property.

Applying for a loan modification will be your best option in these situations

Why You Need A Loan Modification Attorney: Exclusive Reasons

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A loan modification is your legal right, and you can do it yourself. But loan modification lawyers are professionals who are well acquainted with the terms and conditions of various lending services.

Along this, here we describe 5 more reasons why you need a lawyer for loan modification.

Your Attorney Negotiates The Best Deal For You

You may think that loan servicers are prone to help you and not take your property. But unfortunately, loan services are profit-based agencies. And they will do whatever to make more profit. So, when you’re less acquainted with the law of loan modification, your lender may modify the terms in their favor.

In this case, a home loan modification attorney can negotiate the best deal for you. Considering your financial condition and your lender’s terms, they will bargain the best deal for you.

A Loan Modification Attorney Guides You On The Right Track

A home loan modification attorney helps you with unbiased information about your legal rights, options, and responsibilities. And this is the most significant advantage of hiring a lawyer for a loan modification.

As you know, loan modification is not always the correct path to avoid foreclosure. Instead, there are options of forbearance, defending foreclosure in court, etc. Your attorney will explain the options available to you and choose the right one according to your circumstances.

Your Attorney Completes The Paperwork For You

Modifying a loan involves a lot of paperwork and documentation, which can be a frustrating scenario for you in such a condition. In this case, an experienced loan modification lawyer can help you complete the paperwork.

Your lawyer keeps you updated about what information and documents you need. Moreover, they require an application that explains your financial hardship. Seasoned attorneys can best explain your condition to convince your lender.

Lawyers Help You To Avoid Scams And Complexities

It’s a confusing situation when there is a chance of foreclosure and losing your home. The miscreants take advantage of these situations. There are lots of scammers who can mislead you and lose money. To avoid possible scammers, it’s best to hire an experienced lawyer for a loan modification.

Again, your servicers can make complexities on documentation and take illegal extra time to respond. Instead, a lawyer for loan modification will handle the case best as they do. Moreover, there are differences in federal laws. A home loan modification lawyer Kentucky will take different measures from a loan modification lawyer Virginia to get the best result.

Lawyers Help You To Appeal Against Your Lender

lawyer and client

The lenders and servicers have all the right to deny your modification. In this, you can appeal the modification against your servicer. And hiring an attorney will result in the best scenario for you. The lawyers can review the case so the lender can approve your modification.

FAQs Related To Loan Modification

You will find the most frequently asked questions about loan modification and their answers in the following.

Can You Negotiate A Loan Modification?

According to Regulation X at 12 CFR 1024.41, every homeowner has a right to be reviewed for a loan modification. You can indeed apply for a loan modification. And you don’t need to hire a lawyer for a loan modification, and you can do it on your own also.

How Long Do Loan Modifications Take?

A loan modification typically takes 90 days and takes up to 6 months in some cases. But this length can vary to servicers and state law. For instance, a loan modification lawyer Kentucky and a loan modification lawyer Virginia may take a different amount of time to deal with a modification.

What Documents Are Needed For A Loan Modification?

Person checking documents

The documents you need:

  • A present summary of your finances and paystubs
  • The estimated value of the mortgaged property
  • Copies of tax returns
  • Bank statements
  • A letter explaining your financial hardship and supporting documents, such as medical bills, court documents (like a divorce decree), or a death certificate

Is A Loan Modification Permanent?

Unlike forbearance, a loan modification is a permanent solution to financial hardship.

Can I Cancel A Loan Modification?

This depends on the terms of your servicer and lender. Like, in Florida, you can cancel the agreement without penalty within 3 business days. Likewise, a loan modification lawyer Kentucky and a loan modification lawyer Virginia may take different measures in this case.

Final Thought

Loan modification can be a lifesaver approach for you when there is a risk of foreclosure and losing your home. Sometimes hiring a lawyer for loan modification can be the only difference between losing and regaining your property. Hopefully, you find this article useful and become confident about hiring a loan modification lawyer.

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