Mortgage Modification and Other Debt Solutions

Due to the recent financial meltdown and mortgage crisis, the practice has evolved to assist homeowners and investors in financial distress or default, or who owe more than their property is worth. Solutions may include mortgage modification, short sales, foreclosure defense, predatory lending and other debt solutions. The most important thing a borrower in distress can do is to act promptly, before foreclosure commences, to find out whether the borrower is a viable candidate for mortgage modification or a short sale, or whether the borrower needs bankruptcy protection. The longer borrowers wait, the fewer options are available.

Although Ms. McGill’s experience in foreclosure law goes back to the 1980’s, unprecedented problems and new solutions led to the development of a new multidisciplinary team to address these issues. The team includes former loan agents who are experienced in evaluating a borrower’s financial position and assembling a well conceived package to convince the lender to provide a long term mortgage modification, or to agree to a short sale, or other debt solutions. Ms. McGill is an active part of the team and adds her knowledge of foreclosure law, lending law, predatory lending, and other loan related issues to help craft a solution for each client. Each team member is a skilled negotiator and is dedicated to providing the best possible solution for each client’s unique needs.

Mortgage Debt Solutions may include the following:

Mortgage Modification:

The borrower and the lender or loan servicer agree to permanently change one or more of the terms of the mortgage contract to lower the mortgage payment. Modifications can include lowering the interest rate, extending the term of the loan, adding missed payments to the loan balance, and/or reducing the principal balance. A loan modification may be necessary if the borrower is facing a long-term reduction in income. Borrowers must verify their income and convince the lender that they would be able to pay the modified mortgage.

Refinancing:

If the borrower is current on their mortgage payments, has good credit, and does not owe more than the property is worth, borrower may be able to refinance the property to reduce the payments by taking advantage of current low interest rates.

Reinstatement:

If a borrower has missed mortgage payments and the lender has declared the loan in default, the lender or loan servicer may agree to allow the borrower to reinstate the loan by paying the past-due amount, plus any late fees or penalties, by a date agreed on. This option may work if borrower’s nonpayment was due to a temporary problem which has been resolved.

Repayment Plan:

If a borrower has missed mortgage payments, the lender or loan servicer may agree on a repayment plan wherein the borrower adds a portion of the past due amount to their regular payment. This option may work if the borrower has the financial ability to make up the missed payments over time.

Forbearance Agreements:

When a borrower is unable to make their payments, or is in foreclosure, and negotiations are in progress on a solution, such as a sale, mortgage modification or reinstatement, the lender may agree to suspend foreclosure. Mortgage payments may be reduced or suspended for a defined period of time. At the end of that time, the borrower must resume the regular or modified monthly mortgage payment and may be required to repay the missed payments in a lump sum payment, or additional monthly payments until the borrower is caught up. A forbearance agreement is a temporary arrangement while efforts are ongoing to find a permanent solution.

Short Sale:

If the borrower does not owe more than the property is worth, or has the funds to make up the difference, and wants to get out from under an onerous mortgage, the borrower can sell the property, pay off the mortgage, and preserve borrower’s good credit. If the borrower owes more than the property is worth, and is unable to pay the difference, and needs to sell the property, the lender may be willing to allow the property to be sold and accept less than the amount owed instead of foreclosing. The lender is more likely to agree when the loan is a purchase money (non-recourse) loan. The borrower may continue living in the home while the property is for sale and must cooperate in maintaining and showing the home. Although borrower’s credit will be damaged by a short sale, the damage is not as long lasting as having a foreclosure.

Deed in lieu of foreclosure:

A lender may agree to accept title from a borrower, instead of selling the property in a foreclosure. This saves the lender the cost of a foreclosure sale. Lenders are not usually willing to do this as they do not want to own the property. Also, a deed in lieu may not be an option if other loans or obligations are secured by your home. Although borrower’s credit will be damaged, the damage is not as long lasting as having a foreclosure.

Litigation:

Although we strive to find foreclosure solutions outside the courtroom, if litigation is necessary, we will fight aggressively on your behalf. Often, simply filing and serving a lawsuit will lead to a dramatically different response from the lender.

The most important thing is to act now, rather than react. Don’t wait for a notice of default – get help today. Call the law Office of Michele L. McGill for assistance today at (415) 334-8080.