Considering a Loan Modification?

Miami foreclosure defense lawyers at Jacobs Keeley know that when mortgage borrowers are in default and seeking home loan modification, they may in some occasions seek relief form the provisions set forth in the Truth-in-Lending-Act (TILA).

TILA, as implemented by Regulation X, has been on the books since 1969, and has been amended numerous times since in various efforts to bolster consumer protections.

Some of the most recent changes include:

  • The 2009 Helping Families Save Their Homes Act in 2009;
  • Provisions in 2010 barring lenders from “steering” consumers to predatory loans;
  • Dodd-Frank Act reforms on home appraisal integrity and escrow accounts for high-priced mortgages implemented in 2010 and 2013;
  • Final rules by the Consumer Financial Protection Bureau in 2014 that set stricter loan origination requirements and greater disclosure by lenders.

In order to avoid unnecessary run-around and ensure the greatest degree of consumer protection, seek the help of an experienced foreclosure defense attorney when seeking a home loan modification.

Home Loan Modification FAQ

A home loan modification is a permanent alteration to one or more of the terms of a borrower’s loan. When done effectively, it can result in a payment plan that is more affordable and more closely aligned with the property’s market value.

To better understand the process, our Miami loan modification attorneys offer some answers to Frequently Asked Questions:

Q: How many loan modifications is a homeowner entitled to receive?

A: Borrowers are allowed to receive just one loan modification in the course of a two-year period.

Q. Will a loan modification stop foreclosure?

A. Yes, and that is typically the goal. New laws prohibit “dual-tracking” by lenders, which is when loans are simultaneously being modified and moved through the foreclosure process.

Q: Who is eligible to receive a home loan modification?

A: Lenders are required to use a stringent set of financial criteria when weighing whether a homeowner is eligible to receive a loan modification. Some of these include:

  • A verifiable increase in living expenses or loss of income;
  • At least one borrower on the loan is in receipt of continuous income in the form of employment, social security, veterans benefits, disability, survivor benefits, pensions or child support;
  • The borrower’s surplus income is a minimum of $300 and at least 15 percent of his or her net monthly income;
  • 85 percent of the borrower’s surplus income isn’t enough to cover the arrears within six months;
  • The borrower has been able to successfully complete either a four-month trial plan in a case of imminent default or a three-month trial plan based on the reduced mortgage payment amount.

Q: Is a lender allowed to initiate an interior inspection of the home?

A: Yes, if there are concerns that the physical condition of the property might negatively impact the homeowner’s continued ability to pay the modified amount.

Q: Is a lender allowed to lump late charges into the loan modification agreement?

A: Generally, no. The lender is expected to waive all late fees that have accrued prior to that point.

Q: What interest rate should the lender use when completing a loan modification?

A: The current market rate.

Q: Do lenders have to re-amortize the total amount due over the 30-year loan life?

A: Yes, from the due date of the first installment required under the modified mortgage.

Q: What if I am unemployed, but my spouse works and is not listed as a borrower?

A: In that case, the lender has to conduct analysis of all expenses and income to see whether the surplus income is enough to meet the new modified mortgage payment, but still not enough to cover the arrearage. Even then, a loan modification is not a given, and the lender will have to consult with its own legal team to determine eligibility.

A Lawyer Can Help With Home Loan Modification

While some lenders insist borrowers avoid spending money on a lawyer when they could apply those funds to overdue mortgage payments, the truth of the matter is an experienced loan modification attorney will fight to ensure you get the best deal possible – which saves you money in the long run. A good lawyer can help you:

  • Understand your legal rights.
  • Negotiate better terms with the lender (which can help save you money).
  • Complete and submit required paperwork necessary for loan modification.
  • Compel the lender to take quicker action.
  • Identify potential lender violations of law that could be used as leverage.
  • Stop a foreclosure.

While there is no legal requirement for you to have a lawyer in this process, you can bet the bank has an army of legal advisors on its side. Legal representation is especially important when you consider the litany of abuses by lenders and mortgage servicers against borrowers seeking loan modification. Thousands of people were wrongfully foreclosed upon because they were denied loan modifications for which they were eligible. New pro-consumer laws work to your advantage, but you will need someone who is both knowledgeable of those laws and dedicated to advancing your best interests.

If you're battling foreclosure in Miami or the surrounding areas contact Jacobs Keeley Trial Lawyers for a confidential appointment to discuss your rights.

Call us at (305) 358-7991.

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