Friday, April 30, 2021

Is a Mortgage Modification My Only Option to Avoid Foreclosure?

When you are struggling to make mortgage payments, the prospect of losing your home can be devastating. For far too many Americans, the COVID-19 pandemic has resulted in immense job losses and the inability to make payments on loans and other lines of credit, including mortgages. Since there is so much information about foreclosure on the internet, it can be difficult to obtain factual information that can actually help you to understand your options. Even if you have not conducted internet searches for options to avoid foreclosure, you might not be getting the whole picture from a friend or family member who relied on a mortgage modification to avoid losing their home.

In short, misconceptions about foreclosure prevention abound, and it is critical to speak with an experienced Oak Park foreclosure defense attorney who can provide you with accurate and detailed information about the full range of options that may be available to you. Mortgage modification may be one option for avoiding foreclosure, but it is not the only option.

Seek a Mortgage Modification

A mortgage modification can be one path to avoiding foreclosure. With a mortgage or loan modification, the homeowner asks the lender to change the terms of the loan in order to make the monthly mortgage payment lower. A modification can involve adding additional payments to the loan, extending the length of the loan, or reducing the interest rate, for example.

Obtain a Forbearance

If you are struggling in the short term but you expect to be able to resume making regular mortgage payments in the near future, your lender may be willing to agree to a forbearance. With a forbearance agreement, you may be able to make reduced mortgage payments, or no mortgage payments at all, for a particular period of time.

File for Chapter 13 Bankruptcy

Chapter 13 bankruptcy is an extremely helpful tool for homeowners who want to avoid foreclosure and get back on track with their loan. In a Chapter 13 bankruptcy, the automatic stay will prevent the lender from moving forward with any foreclosure actions, and you will be able to include your mortgage in your bankruptcy repayment plan. However, to qualify for Chapter 13 bankruptcy, you will need to be able to show the court that you can make payments on your bankruptcy plan over a period of three to five years.

Refinance Your Loan

Sometimes homeowners who are struggling to make payments have loans with unfavorable terms. It may be possible to refinance your loan for a better rate, thereby resulting in significantly lower monthly mortgage payments. However, refinancing may not be an option if your credit has already taken a hit due to missed mortgage payments.

Consider a Short Sale

The above options are all ways that you may be able to prevent foreclosure and remain in your home, which is what most homeowners are hoping for when they begin looking for information about foreclosure avoidance. Yet in some cases, it is not possible to remain in the home. With a short sale, you will not be able to keep your house, but you will be able to avoid having a foreclosure on your credit.

Contact Our Oak Park Foreclosure Defense Lawyers

If you have questions about foreclosure avoidance options, one of our experienced Oak Park foreclosure defense attorneys can help you. Contact the Emerson Law Firm to learn about your options.

See Related Blog Posts:

How Long Can Foreclosure Suspensions Last?

Extended Foreclosure Moratorium Will Help Homeowners

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