Home Loan Modification Attorney helping Williston, Burlington, Vermont and surrounding areas

Your home is the center of your family's life. When you are having trouble making the loan payments on your home, or if you have already fallen behind on payments, it can create a confusing and stressful situation. However, in many cases, you may be eligible to apply for a home loan modification from your lender. A modification can bring your mortgage payments down to a more affordable amount.

At Lynch Legal Services, PLLC, our Vermont home loan modification lawyer guide you through the application process and work with the bank to come up with a reasonable repayment plan. Our down-to-earth approach can make even the most complicated and confusing application processes seem easier and stress-free.

We want to give you the tools and confidence to pursue the relief you need to stay in your home. Contact our firm today for a free and confidential case evaluation to learn more about how we can help.

How Our Vermont Home Loan Modification Lawyer Can Help

If you decide to apply for a home loan modification, our firm can help you by:

  • Explaining your rights and options for loan modification, as well as other available options to help you keep your home
  • Working with you to gather the necessary information and documentation
  • Ensuring that your loss mitigation application is properly filled out
  • Responding to the bank's requests for additional documents or information
  • Reviewing an application rejection, if it occurs, and advising you on the best steps to take in filing an appeal
  • Appealing a rejected loan modification application, if necessary

Potential Types of Loan Modifications

The bank can agree to modify the mortgage on your home in one or more of several different ways, including:

  • Extending the term of your mortgage, such as changing it from a 15-year to a 30-year mortgage or a 30-year to a 40-year mortgage
  • Reducing the interest rate on your mortgage, either temporarily, or permanently as part of a refinancing plan
  • Reducing the principal balance (depending on how this is structured, any reduced amount may qualify as taxable income)
  • Changing your mortgage from an adjustable-rate mortgage to a fixed-rate mortgage (and vice-versa)
  • Delaying or deferring payments due on your mortgage
  • Adding past-due payments or fees into the principal balance

An Overview of The Home Loan Modification Process

If you are having trouble making your mortgage payments or if you have already missed payments, you can begin the home loan modification process by contacting your mortgage lender and requesting to complete a loss mitigation form. This form gives your lender information about your current financial situation to determine whether alternatives to foreclosure, such as loan modification, make financial sense for the bank.

You will often be required to submit documents and information along with the loss mitigation form, including:

  • Information about your home
  • Recent bank statements
  • Recent income tax returns
  • Paystubs or income statements for self-employed persons
  • A schedule of your income and expenses.

An attorney can help you collect the necessary information and ensure that your loss mitigation package is properly filled out. Many homeowners have their applications denied for submitting incorrect or insufficient information.

If the bank denies your application, you usually have the right to file an internal appeal with the bank. You can improve your chances of success on appeal if you get precise information about why your application was denied. An attorney can contact the bank on your behalf to get to the bottom of why your application was denied and help you to put together additional information that might help your application get approved on appeal.

If the lender approves your application, they will offer a proposed modification of your mortgage. You typically will be offered a trial period of three to six months, which allows the bank to see whether you can afford your modified mortgage payment.

Is a Home Loan Modification Right for Me?

Not every homeowner will qualify for a home loan modification. Each lender has different qualifications. Generally, lenders will approve home loan modifications only when the lenders feel confident that the homeowner can afford the modified payment, and that the loan modification makes better financial sense for the lender than the alternative of foreclosure.

A home loan modification may be right for you if:

  • You can afford a reduced mortgage payment. If, for example, you have lost your job and have no other sources of income, your lender might assume that you cannot afford any sort of modified mortgage.
  • If you need temporary relief. This includes situations such as if you are going through an illness or a divorce, or if you live in an area that has suffered a natural disaster.
  • If your loan can be feasibly modified. For example, your mortgage isn't already at the maximum term offered by your lender, or a proposed modification won't put you underwater on your mortgage.

Does Applying for A Loan Modification Stop Foreclosure?

Under regulations issued by the federal Consumer Financial Protection Bureau, lenders are required to stop any efforts toward foreclosure once a homeowner has applied for a loan modification. Lenders may not restart foreclosure efforts until either the lender informs the homeowner that their application has been rejected, the homeowner has rejected the proposed loan modification, or the homeowner fails to comply with the terms of the loan modification (such as missing payments during the trial period).

However, in many cases, lenders will still pursue foreclosure while reviewing a loan modification application or while the homeowner is in the midst of a trial period for a potential modification. This is called double-tracking. For that reason, it helps to have an experienced home loan modification attorney who can ensure that your rights are protected throughout the loan modification process.

What Effect Could a Home Loan Modification Have on My Credit?

The home loan modification process can have an impact on your credit report and credit score. If your mortgage is owned or backed by a federal agency such as Fannie Mae, Freddie Mac, the FHA, or the VA, if you seek a home loan modification under certain circumstances (for example, due to the COVID-19 pandemic), then the modification won't be reported to the credit bureaus.

Depending on how your loan modification is structure, you may take a hit to your credit score and report. Applying for refinancing may result in lenders submitting a hard inquiry on your credit report, which can reduce your credit score several points for a period of a few months.

Loan modifications may be reported on your credit report as a judgment or a settlement of debt, which can also have a negative impact. Increasing the balance of your mortgage principal in a loan modification can also ding your credit score.

Talk to A Vermont Home Loan Modification Lawyer Now

If you are having trouble making your mortgage payments, don't wait until the bank begins foreclosure proceedings to take action. You might be able to keep your home and obtain a more affordable mortgage payment by working out a home loan modification.

Get a free consultation with a Vermont home loan modification lawyer from Lynch Legal Services, PLLC, today to discuss your rights and options and to learn more about how our firm can help you get the relief you need.