In many instances, a mortgagor (borrower) will request a mortgage modification from his or her mortgagee (lender) once the mortgagor has either fallen behind on mortgage payments, or has become concerned about the possibility of mortgage foreclosure proceedings occurring in the near future. Generally speaking, a successful mortgage modification requires about three to eight months for completion. The modification may involve the placement of interest, mortgage arrears, insurance, and/or delinquent taxes in the principal balance. Additionally, a mortgage modification can lower the interest rate on the subject loan.
While a mortgage modification can result in lowered monthly mortgage expenses, it will also typically result in an extended repayment term. In many but not all instances, mortgage modifications occur during a Chapter 7 bankruptcy case or a Chapter 13 bankruptcy case. The bankruptcy alternatives attorneys of Sadek & Cooper Law Offices have extensive experience handling mortgage modifications for both investment properties and residential properties in Pennsylvania.
Pre-Foreclosure Forbearance Plan
Before a mortgage foreclosure occurs, the mortgagee may agree to delay a sale contingent upon the reinstatement amount being repaid over a short time period. The pre-foreclosure forbearance plan repayment significantly differs from a mortgage modification in that the former does not change the overall terms and provisions of the loan. Generally speaking, a pre-foreclosure forbearance plan may be extended for up to six months, and requires that timely monthly mortgage payments, in addition to the amount needed to cure arrearages, be paid within the agreed-upon window of time.
A short sale of property is a tool used to stay an imminent mortgage foreclosure. A short sale is where the mortgagor sells the subject property “short” of the mortgage amount. For example, if one owes $100,000.00 on their home, but they have an agreement of sale states a purchase price of $80,000.00, a short sale may be a possibility. A short sale has several obstacles, primarily; it must be approved by the mortgagee. Further, the sale is dependent on the potential buyer receiving a mortgage in order to buy the subject property.
Debt Consolidation can work in a variety of ways, but the general premise is that debts are settled through negotiation with creditors. The debt settlement maybe through monthly payments distributed to creditors or lump sum payments made to satisfy debts due and owing. A debt consolidation plan varies according to the clients situation and ability to repay the debts allegedly due and owing.
Fair Credit Reporting
The Fair Credit Reporting Act (FCRA) promotes the accuracy, fairness and privacy of information in the files of consumer reporting agencies. Under the FCRA you have several rights including, the right to information in your file, ask for a credit score, dispute incomplete or inaccurate reporting. Further under the FCRA Consumer credit reporting agencies must correct or delete inaccurate, incomplete or unverifiable information. Lastly, the FCRA requires consent for reports to be provided to employers or potential employers.