Money

Foreclosure Defense through Mortgage Modification

Posted by on Oct 2, 2014 in Money | 0 comments

A change in one’s financial situation, usually resulting from increase in tax payment, necessary medical treatment, loss of job and/or divorce, have/has affected the capability of many Americans in paying their mortgage obligations, resulting to the foreclosure of their property. Foreclosure does not happen overnight, though; it follows a process which gives the borrower all the time to search for ways that will enable him/her to pay the mortgage and contact the mortgage lender or mortgagee, to explain why the missed payments.

Foreclosure, according to the US Department of Housing and Urban Development, is a legal procedure wherein a mortgage lender tries to recover from a borrower whatever amount of balance still remains from a loan that has not been paid for about three (successive) months; the amount of balance is collected from the forced sale of the property used as loan collateral.

There are three types of foreclosures, all requiring the issuance of public notices and notification of the proceedings to all parties concerned:

Judicial foreclosure is wherein a lender files a suit against a borrower for payment of unpaid mortgage. Notice of demand for payment will be mailed to the borrower who will then have 30 days to make the payment (or raise a legal defense to save his/her property)or suffer foreclosure. A property not paid is sold to the highest bidder in an auction carried out by the sheriff’s office or a local court.

Strict foreclosure, which is allowed in a few states, is possible only if the amount of the loan balance is still higher than the value of the property to be foreclosed. In this type of foreclosure, the lender files a suit against the delinquent homeowner. If the borrower still fails to pay within the specified court-ordered timeline, then the lender takes total hold on the mortgaged property.

Power of sale or statutory foreclosure, which many states allow (but only if a power of sale clause is included in the mortgage), gives the mortgage company the authority to hold a public auction on a property with defaulted mortgage payments despite notices of payment demands.

On its website, the law firm of Ryan J. Ruehle, LLC, understands the plight of many homeowners, who suddenly experience hardship in mortgage payment due to an unexpected change in their life’s situation. The firm explains, however, that there are legal ways for homeowners not to lose their homes; that there are ways that can delay or prevent any legal process of foreclosure which, apparently, has always favored lenders and banks due to their expertise in the practice and laws of the process. One way is through mortgage modification.

Mortgage modification may include a change or reduction in the interest rate of the loan or in the amount of monthly payment, a reduction or removal of penalties for non-payment or late fees, and forbearance of the lender to temporarily allow the homeowner from making payments and allow an extension in the time for paying the mortgage.

Mortgage modification may be the simplest way to prevent foreclosure, but its success depends entirely on the knowledge and expertise of a foreclosure defense lawyer, his/her ability to pinpoint the imperfections of the mortgage industry and in questioning the legality of the way it operates.

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