Loan Modification in California: California Loan Modification Attorney
Our goal is to keep you in your home and avoid foreclosure. We are experienced in working with your lenders to restructure your current mortgage loan(s) by providing you with a unique, professional plan that you and your mortgage lenders can consider.
We fully understand that you have problem and only a short time to overcome the real possibility of losing your property through a foreclosure. We will work to immediately stop foreclosure.
We are experienced attorneys and real estate brokers who understand that federal rules and lender foreclosure policies often conflict. Few people outside the banking world have the knowledge to work with your current lender to restructure your loan and actually accomplish a loan modification.
Please note: We believe that California bankruptcy is the LAST resort.
Most lenders will consider loan modification where most or all of the delinquent payments and foreclosure fees are added on to the back end of the loan. Payments often can remain approximately the same. In some cases the interest rate may be reduced permanently.
It is a fact that nearly every major mortgage lender now offers loan modification programs to their borrowers. The objectives of both the lender and the borrower in the loan modification process happen to be the same: design a repayment schedule at a level where the borrower can consistently make the mortgage payments, as well as pay other necessary living expenses including car payment(s), food and groceries, utilities, gasoline, insurance, child care, clothing, home maintenance, property taxes, etc. Lenders do not want (and typically will not approve a scenario where) the mortgage payment consumes the borrowers entire paycheck. Essentially, the borrower must be able to live and afford their "normal" life while also covering the mortgage payment. Accordingly, the sticking point often becomes how much the mortgage payment ultimately turns out to be. Many borrowers had been on programs such as "negative amortization" or "interest only" where the money sent to the lender did not go to pay down principal. Obviously this is a scenario that can not continue for the entirety of the loan. At some point, such loans "adjust" and the adjustment can have a substantial impact on the mortgage payment amount.
To address the issues of borrowers, many lenders have designed favorable "recapitalization" programs where mortgage payment arrears (payments that have come due but have not been made) are added to the principal balance of the loan and the borrower goes back to a "current" status on the loan.
Nearly all lenders will also consider rate reduction programs which can substantially reduce a borrower's monthly payment amount. The lender knows that if they hold out for the full contract interest rate (often 8% or higher), the borrower will be unable to make the mortgage payment and the house will be taken back at foreclosure. That scenario is not desirable for lenders in most cases. In order to lower the monthly mortgage payment, lenders frequently offer "rate reductions" which serve to reduce the amount the borrower pays monthly, by reducing the interest amount. Especially during the early years of a mortgage amortization schedule, nearly the entire payment is going to pay interest. If the interest is lower, the payment can be reduced accordingly. Today many lenders also offer "temporary rate reduction" programs in which the interest rate is reduced (often well below the market rate) for a period of time to allow the borrower to "get back on track". These temporary rate reduction programs can take interest rates as low as 2% for a period of time (typically up to five years). The idea is for payments to remain or move to a level that is affordable.
Many loan modification companies and even attorneys are advertising that they can reduce principal on residential mortgage loans. This type of advertising is misleading. While it certainly is possible to reduce principal on a 2nd or 3rd mortgage, first mortgages are generally not eligible for principal reductions. Lenders do not consider the issue of decline in market value and reflecting a loan balance consistent with the current value of the home. On 1st mortgages, to offset the decline in value, lenders often will reduce a borrower's interest rate to below market levels, but will rarely, if ever, reduce principal on 1st mortgages. Although there are no official lender programs to reduce principal on 1st mortgages, McFarlin & Geurts has been successful in reducing principal balances through mortgage litigation and rescission. For 2nd and 3rd mortgages, voluntary principal reduction is often a possibility.
Many lenders will only offer a forbearance program that requires borrower to immediately pay at least 20% or more of the total delinquencies including foreclosure fees, plus the balance of the delinquency will be added to their regular monthly payments over a short period of six to forty-eight months. Forbearance plans do not remove a foreclosure action or stop foreclosure but simply continue it in place until the loan is current.
Nearly all lenders will initially attempt to "sell" borrowers on a forbearance program. A forbearance program is where the borrower pays off the arrears or back payments over a short period of time, in addition to their regular monthly mortgage payments. This causes the mortgage payment to actually increase during the term of the forbearance program. Alternatively, a lender may "offer" to allow the borrower to catch up all back payments at once in a lump sum payment to the lender. In either scenario, forbearance programs do not typically stop foreclosure proceedings. Lenders typically march forward with the foreclosure process, and simply "postpone" the foreclosure sale date so long as they are receiving the monthly mortgage payment plus the monthly forbearance payment. This gives lenders tremendous power to simply sell the property the minute a forbearance payment is missed as the foreclosure is all lined up.
The reason forbearance programs often fail is because the lender is not taking into consideration the borrower's ability to repay the loan or the borrower's hardship. In forbearance programs, lenders usually consider only their own view of financial matters.
McFarlin & Geurts understands the objectives of borrowers, works to achieve the best possible loan modification program available. Often times, through our network of contacts, we are even able to find out about new programs that are coming out soon for certain lenders and wait to submit a client's file to take advantage of a particular opportunity. Finally, we force the lender to consider our clients' ability to repay the loan. If the lender does not take into consideration the borrower's financials, they will not offer meaningful relief.
To get started on a loan modification today, and see what programs may be available for you including recapitalization programs, pay rate reductions, principal reductions or other offers lenders may have, please contact a representative today at (949) 544-2640.
FORBEARANCE PROGRAMS OFTEN FAIL IF THE LENDER IS NOT FORCED TO CONSIDER THE ABILITY OF THE BORROWER TO PAY. WE REQUIRE THEM TO CONSIDER YOUR ABILITY TO PAY.
A Loan Modification is the alteration of one or more of the terms of a mortgage loan to meet the ability of the borrower to make payments. The need for this alteration or change in characteristic of the loan can be caused by many factors, such as the borrower having less income than anticipated (reduction in salary or loss of job), a family or medical hardship (illness or death in the family), a scheduled change in loan structure that the borrower wasn't aware of or didn't anticipate (payment adjustment), a decrease in the value of the property, or a variety of other factors. Lenders will consider many of these types of issues a "hardship", and are generally open to altering the repayment terms of the mortgage loan (and on certain loans the principal balance), due to the borrower's hardship.
Our goal, in each loan modification matter, is to keep every borrower in their home and avoid foreclosure. We are experienced attorneys, and real estate professionals. We have successfully negotiated many loan modifications for our clients, and were among the first law firms to create "loan modification" as a practice area. You can view a partial list of our recent sample results right here on our website. We have successfully negotiated loan modification arrangements with virtually every lender. The loan modification process today generally involves working with lenders to restructure current mortgage loan(s) and provide you with a unique, opportunity to hit the "reset button" on your loan.
Anytime a borrower is facing foreclosure, or a situation where they are unable to make the scheduled mortgage payments, it is a serious problem. We understand not only the financial impact this type of situation can have on a family, but also the emotional toll it can take. The prospect of losing a home to foreclosure is never something a borrower wants to face, but facing up the financial shortfall is actually the most important part of the loan modification process. In order to attempt to resolve the situation for you, we will need to receive from you a realistic budget of ALL expenses, and all household income.
Few professionals outside the banking and real estate litigation industry would have the expertise to restructure your loan and accomplish a loan modification on the most advantageous terms for you.
To get started on a loan modification today, and see what programs may be available for you including recapitalization programs, pay rate reductions, principal reductions or other offers lenders may have, please contact a representative today at (949) 544-2640.
