Using a New Jersey Mortgage Modification to Avoid Foreclosure
If you have fallen behind in your mortgage payments, attempting to negotiate a mortgage modification may seem like the only way to reduce your monthly payments to a manageable level. However, using a New Jersey mortgage modification to avoid foreclosure is not without its risks.
Before attempting to pursue negotiations regarding a mortgage modification with your mortgage company, it is important to first contact a skilled mortgage modification attorney in order to fully understand the potential consequences and issues that can arise in obtaining a mortgage modification.
What is a Mortgage Modification?
A mortgage modification occurs when a borrower negotiates with a mortgage lender in order to modify the terms of a mortgage agreement. Assuming that it is relatively early in the lengthy foreclosure process, mortgage modifications can occur without the need to file for bankruptcy and can provide a viable option for some borrowers who do not have a significant amount of unmanageable debt outside of the mortgage.
A mortgage modification may:
- Reduce the borrower’s monthly payment, often by lengthening the overall term of the mortgage period
- In rare cases, reduce the total principal balance of the mortgage loan
- Modify the interest rate associated with the mortgage to reduce overall payments
Using a New Jersey mortgage modification to avoid foreclosure will often result in the mortgage being deemed current by adding any missed payments to the end of the mortgage term. In other cases, the mortgage can be brought current by amortizing the missed payments over the term of the mortgage.
However, using amortization can actually increase the amount of the borrower’s monthly payment, because the process involves dividing the past due amount by the number of months left in the mortgage period, and adding that amount to each monthly payment.
How Can a Borrower Negotiate a Mortgage Modification in New Jersey?
Using a New Jersey mortgage modification to avoid foreclosure will only be a viable option for borrowers with a steady income stream that will allow them to make the proposed monthly payments for the foreseeable future. A mortgage modification lawyer can help the borrower gather the documentation that will likely be required, including:
- Recent pay stubs or proof of income
- Tax returns
- A hardship letter that explains why the borrower fell behind in his or her mortgage payments
It is important that the borrower remember that the mortgage lender is under no obligation to negotiate a mortgage modification. Typically, a mortgage lender will not negotiate a past due mortgage if the borrower has a substantial amount of disposable income and has experienced no financial hardship that rendered the existing mortgage unmanageable.
Avoiding Adverse Consequences
Using a New Jersey mortgage modification to avoid foreclosure is not the right solution for all borrowers. Absent sufficient income to satisfy the requirements of a newly negotiated mortgage, borrowers may find themselves worse off than if they had never attempted the modification.
A mortgage modification attorney can help the borrower understand what is feasible for his or her individual situation and will also work to ensure that the terms of the modified mortgage are fair and reasonable.
Role of a Foreclosure Attorney in New Jersey
Attempting to negotiate a mortgage modification alone can be extremely frustrating if you are inexperienced in handling these types of negotiations. In many cases, the mortgage company will simply fail to respond to your inquiries.
Using a New Jersey mortgage modification to avoid foreclosure often requires the help of an experienced attorney who understands the process and could work with the mortgage company to get results to help you stay in your home.