Stop a Foreclosure with a Loan Modification or a Chapter 13
If you’re looking for ways to stop foreclosure immediately, it’s important to act fast. The Consumer Financial Protection Bureau stipulates that lenders put a pause on the foreclosure process while your loan modification application is pending, but it doesn’t always happen the way it should, particularly when you’re dealing with your lender on your own and don’t have an attorney involved in the process.
If you have started the loan modification process early then you may be able to modify your loan before a foreclosure occurs.
The good news is that even if you are too late to modify your loan BEFORE the foreclosure you can still file a Chapter 13 bankruptcy to immediately stop the foreclosure process, then apply for a loan modification.
We have many current Chapter 13 clients that modify their loans while in their bankruptcy case.
New Regulations Are Forcing Lenders to Help Those in Forbearance Plans
A forbearance plan is an agreement that allows homeowners experiencing a temporary hardship to make a reduced mortgage payment (or no mortgage payment at all) during the plan’s term and is aimed at helping homeowners get their financial footing.
Hardships related to COVID-19 are causing millions of Americans to look at a forbearance plan as a way to stay in their homes and avoid foreclosure.
If you receive a forbearance plan, you will eventually have to repay any amounts that were not paid during the plan. Right now, many homeowners are confused about how they’ll be required to pay back the amounts not paid while on a forbearance plan.
There are several options for dealing with these missed payments during the forbearance period:
Option 1: Reinstatement
A reinstatement means that you pay the total forbearance amount all at once.
Option 2: Repayment Plan
A allows you to bring your mortgage current over a period of time (up to 12 months). A repayment plan is an agreement that provides you with an opportunity to repay the forbearance amount on your mortgage by making additional monthly payments along with your regular monthly mortgage payments.
Option 3: COVID-19 Payment Deferral
A COVID-19 payment deferral allows you to bring your mortgage current by delaying repayment of forbearance amounts without changing other terms of your mortgage. This option may be available if you cannot afford a reinstatement or repayment plan. You will not be charged interest on the forbearance amounts, which will be due and payable at the maturity of the mortgage loan or earlier whenever you sell or transfer of the property, refinance the mortgage loan, or pay off the interest-bearing unpaid principal balance.
Option 4: Loan Modification
A loan modification will permanently changes the terms of your original loan. It is intended to make your payments or terms more manageable, and typically results in a lower monthly payment.
Option 5: Refinance
If you have resolved or are in the process of resolving your forbearance plan, you may be eligible to refinance your loan.