Is a Second Loan Modification Possible?

For many individuals, facing foreclosure once offers plenty of motivation to avoid future close calls with their lender.  No matter how hard some try, however, they manage to find themselves defaulting on their modified loan, placing them at risk of losing their home again.  Falling back into debt is not usually done on purpose; some folks are just unfortunate enough to hit more hardships after their loan is modified.

Those who default on a modified loan but want to avoid a short sale or bankruptcy may still be able to stay in their home after defaulting.  Unlike a bankruptcy protection, which requires a borrower to wait at least eight years between filings, there is no amount of time required by law that a person must wait before requesting another modification.  While the chance of being approved for a second modification is slim, it is not entirely impossible, especially if the borrower can prove unethical or predatory lending that cost the borrower more than they should have paid.  This is especially true of borrowers who first modified their loans before the fall of the housing market, before “predatory lending” was such a popular buzz word. 

Some borrowers may have more luck refinancing after defaulting on an original home mortgage loan modification.  The modification would have only adjusted the terms of the original mortgage contract, but the refinance will extend the life of the entire loan, letting borrowers start the clock over from where their payments left off. 

Don’t get the wrong impression, being approved for a second loan modification is ten times more difficult than being approved the first time.  Those who are serious about pursuing their second loan modification should consult with a local real estate / financial lawyer to determine the best course of action and the probability of success.  As long as all the numbers line up, and the borrower has a legitimate hardship, being approved for a second home mortgage loan modification may be difficult, but possible. 

In some instances a person’s lender may have policies in place that limit the borrower’s ability to apply for a second loan modification for the same property, but with enough persistence and the right amount of negotiation talent from an experienced attorney, any company policy that is not rooted in law can be circumvented.  The question the borrower must ask themselves is how much time and effort are they willing to spend in order to pursue the second loan modification.   

Borrowers should think very hard before pursuing a second loan modification.  They are urged to take the advice of an attorney who has experience with home mortgage loan modification cases.  One must consider if, based on their personal financial situation, a second loan modification would be nothing more than a temporary solution to a long term problem.  Think of it this way: A lottery winner buys a multi-million dollar home, loses everything due to poor financial management, and is stuck with a four or five digit mortgage payment.  No amount of modifications will ever be enough to help this kind of person…in which case a bankruptcy or short sale may be their best bet.  Again, the decision must be made based on the individual’s own financial situation.  An attorney is recommended because one can provide an outside view of a person’s financial situation, free of denial and excuses.