OPTIONS FOR LARGE LOANS
Are you unable to pay off a large loan? You're not alone. Unfortunately, many people can't pay off loans thanks to unexpected issues like job loss, medical bills, divorce, and more. If you're late on payments, it's not too late to take action. Here's what you need to know if you're delinquent on a large loan.
WHAT HAPPENS IF YOU'RE DELINQUENT?
If you're behind on payments, there's a good chance you're delinquent. Loans are delinquent as soon as you miss a payment. Missing a loan payment can have severe consequences. You may be charged a late fee, be reported to a credit bureau, or have your loan move into default.
Default occurs when a loan hasn't been paid off for an extended time. The timeline depends on the loan. Federal loans, such as student loans, move into default if they are delinquent for 270 days. Mortgage default typically occurs when you miss a second payment.
The consequences of defaulting on a loan are more severe. Your lender may use a debt collector to recover the payment. At this time, you may be taken to court. If you do not make a payment, the lender has the right to seize your property. You might face a lien on your house or a seizure of your assets. You can also experience a drastic hit to your credit that lasts for years to come.
STEPS TO TAKE IF YOU'RE DELINQUENT
If you know you won't be able to make a loan payment, you must contact the lender right away. Be honest about your situation, and ask if they can do anything to assist you. Some lenders may offer deferments or temporary relief, depending on the circumstance.
You should also contact a lawyer—especially if you've been threatened with legal action. You might be resistant to spend more money on an attorney. However, they can provide you with expert legal knowledge that could end up protecting your assets, preventing foreclosure, and obtaining a loan modification.
If you're behind on loan payments, the Law Offices of Melvin Monachan, PLLC is here to help. We have the tools to protect your interests, prepare necessary documents, and push back against lenders.
CAN I GET A SECOND LOAN MODIFICATION?
After suffering a financial hardship, you obtained a loan modification from your lender that lowered your interest rate and reduced your monthly payment amount. But now, the troubled economy has put you right back where you were before–falling behind on your loan payments and fearful of defaulting. Can you get a second loan modification?
The short answer is yes; obtaining a second loan modification is generally possible. The longer answer is that whether you (or any particular individual) can get a second modification depends on your specific circumstances.
GETTING A SECOND LOAN MODIFICATION FROM PRIVATE LENDERS
Most homeowners have a reasonable chance of obtaining a second modification, particularly if several years have passed between the first loan modification and new request. When there's been a substantial number of years between the first modification and the second request, the lender is likely to have more confidence that the borrower will handle their payments responsibly and understand that they've fallen on difficult times again.
However, even if you've obtained a loan modification relatively recently, you still may be able to negotiate a second one, although it may be more somewhat more challenging.
In either case, you must show that you're suffering economic hardship, usually an unavoidable one, such as a job loss, a medical emergency, or the death of a wage earner in the household. Also, be prepared to demonstrate that you have a stable income and that you will be able to repay the loan in a timely fashion with a second modification.
As the first time around, you must collect all relevant documentation proving both the hardship and your ability to pay. For example, you'll want to provide recent pay stubs or other proof of income, your tax returns, current bank statements, and expense sheet detailing your monthly expenses. You should also write a hardship letter detailing why you are struggling financially and explaining why you have fallen behind on your payments.
You should not delay in asking for a second loan modification. Once you're at least 60 days behind in loan repayments and realize that the situation will not improve, you should promptly contact a real estate loan modification lawyer and start the application process for modification.
SECOND LOAN MODIFICATION FOR FANNIE MAE-BACKED LOANS
If you negotiated the first loan modification through the now-defunct Home Affordable Modification Program (HAMP), their guidelines dictate that you may seek a second loan modification if:
The mortgage loan is delinquent or in imminent default.
The mortgage loan hasn't been modified three or more times, regardless of the loan modification program.
The mortgage loan hasn't received a Flex Modification and become 60 days or more delinquent within 12 months of the modification effective date without being reinstated.
The borrower hasn't failed a Flex Modification Trial Period Plan within 12 months of being evaluated for eligibility for another Flex Modification.
If you're seeking a second loan modification from Flex Modification Program, after receiving the first modification from them, you will only be eligible for a second modification if the modification results in a payment reduction.
If you have any questions about loan modification or need assistance with the loan modification process, contact us today to learn your options.
