Recently, I have had several clients who have contacted our office in order to secure a loan modification. Many clients have indicated that they have been advised by non-lawyers (i.e. realtors, bank agents, etc.) that an easy way to obtain a loan modification is simply to stop making current monthly payments on your home. This way, the clients have indicated, the bank will see that you are having difficulty making your monthly payments and agree to provide you with a modification of your loan.
However, what eventually led clients to our office was the fact that they took this advice without reservation or hesitation. Specifically, clients who were otherwise current with their mortgage payments decided to stop paying their mortgage for a few months. The result was catastrophic. The clients would then contact the bank and were eventually told that they did not qualify for a loan modification and that foreclosure proceedings were underway. While this did not happen to each and every client, the vast majority was denied a loan modification and was now forced into defending a foreclosure, instead of remaining current on their payments.
Those who were able to negotiate with their bank were faced with hefty fines, penalties and attorney’s fees, in order to reinstate their loan. In addition, if the homeowners were unable to reinstate their loans, then we would have to explore alternatives such as deed in lieu, possible alternative financing, or even Chapter 7 or 13 bankruptcy.
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