Being threatened with home or commercial property foreclosure is a scary business. Losing a job, unexpected medical expenses, divorce or death of a spouse can all contribute to falling behind on mortgage payments. However, there are a variety of viable paths to take to stop foreclosure.
Loan Modifications and Short Sales
A mortgage modification changes the terms of the loan agreement between a homeowner and a lender. The goal of a modification is typically to lower the monthly mortgage payment. The lender may modify the mortgage by lowering the interest rate, extending the loan term, or reducing the amount of the principal. Additionally, if the homeowner is already in default, the lender may agree to add any overdue mortgage payments to the outstanding principal. The overdue payments can then be repaid over the term of the loan or in a single balloon payment at the end of the loan term.
Over the years, we’ve developed mutually beneficial working relationships with many lenders throughout New York state. Our knowledgeable attorneys can negotiate with lenders to develop a loan modification agreement that allows you to keep your commercial property or remain in your home.
A short sale is an alternative to loan modification that can occur when the value of your home is worth less than what you owe. If you decide to get out from under, a short sales attorney can work with your lender to discount the balance of your home loan to reflect market value. Then the home can be sold, the proceeds paid to the lender, and the debt balance written off.
Bankruptcy and Automatic Stays
Chapter 13 Bankruptcy provides opportunities for homeowners to delay or prevent foreclosure and pay off back debt on their mortgages. In some cases, homeowners can also eliminate the amount of second or third mortgages. In order for this option to work, you need to generate enough income to at least meet your current mortgage payment and your other basic expenses at the same time you’re paying off the mortgage arrearage.
When you file a Chapter 13 Bankruptcy petition, all foreclosure proceedings must stop until your Chapter 13 repayment plan is approved by the court. This is called the “automatic stay.” If your repayment plan includes provisions for paying off your mortgage arrearage, once the plan is approved by the bankruptcy judge, the lender is bound by the plan and cannot continue with the foreclosure, assuming you make your regular mortgage and bankruptcy plan payments.
What’s The Best Option For Me?
Every foreclosure situation is different, contact us today at (914) 946-2889 for a free consultation with the legal experts at Penachio Malara, LLP. Our knowledgeable legal experts can provide reliable counsel about whether a loan modification or short sale can help you keep your home or if other options might better serve your needs. We’ll protect your rights and help you keep your property.