What to Do When You Can't Afford to Pay Your Mortgage
Most people who buy a home do so flush with optimism for the future and filled with the confidence that they will be able to afford the purchase. They are no longer spending large sums of money every month to line the pockets of a landlord, but are now investing in their future by working to pay off a mortgage which will eventually lead to full property ownership. Unfortunately, life changes, and often for the worse. Maybe you or your spouse has experienced a pay cut or perhaps has even been laid off at work. Perhaps you have suffered a serious injury or major illness and now have to pay for medical expenses. Maybe you purchased your home with an adjustable-rate mortgage (ARM) without fully understanding what you were getting into and are now finding it impossible to afford the increased monthly payment. Whatever the circumstances, you may be able to handle the situation by negotiating with the bank for a loan modification.
How a Loan Modification Works
The goal of a loan modification is to obtain the bank's approval to give you a lower mortgage payment so that you can afford to keep your home and avoid foreclosure. The workout plan commonly centers on reducing the interest rate or extending the loan period, though in some cases the bank may even agree to reduce the loan principle. With success, you may end up with a new mortgage payment which is easier for you to keep up with and which also allows you to enjoy a more comfortable and less stressful life with your family.
Loan Modifications Help the Bank, Too
Why would a bank or other mortgage lender agree to a borrower's request to modify a loan? After all, they can simply foreclose on the loan and recoup their losses by reselling the home to another buyer. The fact is that foreclosure is not as simple or easy as it sounds. Florida's foreclosure laws require a bank to carry out the full process of judicial foreclosure, which means that they will have to sue you in court in order to obtain a foreclosure judgment which allows them to take the house. This can be incredibly costly, in addition to the fact that the bank will lose money every month that the loan is in default and while the property is vacant. In fact, a 2007 report to the U.S. Senate found that the average foreclosure costs a bank $50,000 in legal expenses and lost revenues. To make matters worse, nearly half of all home mortgages in Florida are underwater, so a foreclosure may not even produce sufficient funds to fully pay back the bank.
Why You Need a Lawyer to Negotiate for You
Don't take chances with the situation you now find yourself in. Hire a proven Gainesville foreclosure defense attorney from The Law Offices of Justin McMurray, P.A. to represent you in your request for a mortgage modification. The bank receives phone calls every day from borrowers asking for more favorable loan terms, and it routinely denies these requests. By hiring an attorney, you can send a message to the bank that you are serious about getting results. After all, if the loan modification is denied you might then resort to suing for predatory lending or Truth in Lending Act violations, or perhaps you might even declare bankruptcy to prevent foreclosure with an automatic stay against creditor actions. Contact us now for a free case evaluation so that we can review your situation and begin working on a strategy for achieving a successful outcome.