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Mortgage Modification

Posted by Kevin on September 21, 2009 under Bankruptcy Blog | Comments are off for this article

In a mortgage modification, the lender alters the terms of an existing mortgage loan to make it more affordable to the borrower.

In recent years, mortgage modifications have become a topic of much discussion because of the large number of mortgage defaults during the current recession.   In April, 2009, the government announced the HAMP program whereby lenders and mortgage servicers were given incentives (meaning $) to modify mortgages.  The problem is that, to date, the HAMP program has not worked. Less than 10% of borrowers get permanent modifications

As with other voluntary programs, it is up to the lender to offer you a mortgage modification.  There is a ton of paperwork (which seems to get lost an awful lot) and the process drags on for months.  Finally, what the lenders are offering is not meaningful relief.  The typical modifications have been a lower fixed interest rate for a period of 3-5 years, or “forgiving” arrears by adding them to the principal.  So, you get a slightly smaller monthly payment but you owe more than when you closed on the loan.  No wonder so many modifications fail.

That being said, I encourage my clients to go through the mortgage mod process.  Why?  Because unless you file a Chapter 13 bankruptcy, eventually you are going to work out a mortgage modification or go into foreclosure.  If you get foreclosed, it is important to show the New Jersey court that you took all reasonable steps to save your home.

At Kevin Hanly, Esq., LLC our goal is to keep you in your house, or put you in a better financial situation if you have walk away from your house.  The strategy varies from client to client because no two clients have exactly the same situation.  Go to for more information,  and then contact us to set up a free consultation to analyze your mortgage situation.

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