For starters, borrowers have to understand that a loan modification is never a guarantee. Any person or service that guarantees a loan modification is likely a fraud or a scammer.
So, will loan modification stop foreclosure after divorce?
It’s very possible.
A divorce can put a hefty financial strain on one or both parties involved, which may be enough to illustrate a true need for a loan modification to the lender. When a person applies for a loan modification, they must submit with their application a hardship letter explaining, in their own words, the reason for the request. Those who have recently gone through a divorce will have a hardship that is both verifiable and deserving of a loan modification.
In the hardship letter, borrowers must be careful not to appear bitter, they must only explain facts. For example, if the divorce was the result of infidelity, the borrower writing the hardship letter shouldn’t bring up the “other man” or “other woman”. Lenders just don’t care, plain and simple.
The borrower should explain to their lender how the divorce has hurt their ability to make all of their monthly payments on time by illustrating the level of income that the once married couple enjoyed related to the current income of the struggling borrower.
When a couple gets divorced, which ever half of the couple that was making the most money also takes their paycheck with them. Alimony and child support may be awarded to the other party, but this is not always enough for the person to support themselves on, especially when they become responsible for full mortgage payments.
Divorces have a way of becoming quite expensive, especially if the couple can’t agree on who gets ownership of what. This problem is often complicated by the presence of children, who must also be taken into account. Court appearances and negotiations also affect work performance and may require couples to take time off of work in order to finalize their divorce. When all of these factors are added together financially, a divorce can end up costing thousands of dollars.
Since lenders don’t care about who’s divorcing who, they will continue to pursue their mortgage payments, expensive divorce or not. It is usually in the best interest of the party that maintains ownership of a home to seek a loan modification as soon as possible on account of their diminished income, especially as soon as it becomes evident that making monthly payments will soon present a problem.
In some instances, neither party will want to keep the home. If this is the case, and if both parties are listed on the mortgage, it is recommended that both individuals work as a team to pursue a short sale if the home is worth less than what is owed on the original contract. While it might be tough for two individuals to work as a team to accomplish anything immediately following a divorce, both individuals should keep in mind that their teamwork will prove financially beneficial as they go their separate ways.