No homeowner wants to experience a foreclosure. Losing a job, unexpected medical expenses, or a divorce or loss of a spouse can put you into a precarious financial position and behind in your mortgage payments.

Fortunately, there are ways to avoid foreclosure and bankruptcy.

What is a loan modification?

A loan modification can help make sure you don’t default on your loan, leading to foreclosure, or need to declare bankruptcy. Best of all, you get to stay in your home.

According to the U.S. Department of Housing and Urban Development (HUD), a loan modification is defined as “a permanent change in one or more terms of a borrower’s loan, allows the loan to be reinstated, and results in a payment the borrower can actually afford.”

Do I need an attorney to seek a loan modification?

Some lenders will ignore a homeowner’s efforts to initiate a loan modification or make an offer that is undesirable. Even though hiring an attorney is an added expense, it may save you in the long run. Working with a lawyer will also send a message to your lender that they must deal honestly and cooperatively with you. And, over the years, we’ve developed mutually beneficial working relationships with many lenders in New York State.

An attorney should shield you from debt collectors, uncertainty, and keep you informed of the best options. Your lawyer will provide you with solid legal representation, which includes analysis, interpreting contracts and legal codes, and arbitration to reach a fair agreement. Your attorney will ensure that you understand the terms before you agree to a modification offer. This is especially important since most modifications stipulate that you are ineligible for another modification for 12 months once the offer is accepted. All of the services your attorney will provide you will be spelled out in a retainer agreement before you embark on the loan modification process together.

Note: While there are legal and ethical loan modification companies, many more exist to take advantage of your situation. An experienced attorney will help you avoid scams.

Another reason to engage with a bankruptcy attorney to assist you with your loan modification is that they will help you collect and complete all of the required documentation accurately and within a timely manner. What could take you days to complete on your own, can be completed by an attorney in a matter of hours.

In short, your chances for a successful outcome are higher if you work with a bankruptcy attorney to negotiate the best interest rates and substituting fixed interest rates for adjustable rates, waiving accrued interest, agreeing on payment extensions, and reducing balances.

What is a short sale?

A short sale is when you sell a property for less than the balance you owe on the mortgage.

Why should I consider a short sale?

If a loan modification isn’t viable, selling your home via a short sale may be your next best option.

A seasoned bankruptcy attorney will help you negotiate with your lender on the getting the balance of your home loan to reflect the current market value. This means that when the house sells the bank will get that money back, and most of the time the lender will consider the mortgage paid in full.

Additional benefits to a short sale:

  • You avoid the risk of foreclosure and the associated negative credit ramifications.
  • You can stay in the home until is sells. In foreclosure, you’re forced to vacate immediately.
  • The bank foots the bill for the closing costs.

Your lender must approve a short sale. You will be required to submit an offer letter, as well as a “hardship letter” explaining why you can no longer make your mortgage payments, and include financial documents like income statements and medical bills to back up your claim. A bankruptcy attorney will help you understand what to file with your lender, and the terms of your short sale. This ensures you don’t miss important details that can cause problems later.

We are here for you.

Call (914-946-2889) or email us at Francis J. Malara or Anne Penachio with any questions or for a free consultation.


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We are a Debt Relief Agency. We Help People file for Bankruptcy under the Bankruptcy Code.


The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters and electronic mail. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.

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