Mortgage Modification and Bankruptcy

Under existing Bankruptcy laws, debtors are not able to force a first mortgage to modify the terms of the mortgage on loans for their primary residence. However, as discussed elsewhere on this site, you may be able to remove a second mortgage.

While we can not currently force a lender to modify the first mortgage, many lenders who realize the alarming state of the economy are willing to negotiate a modification of their mortgage, allowing a debtor to lower their monthly payments. This is a relatively recent change for many lenders who had previously refused to accommodate such requests. Such a modification may drastically help a homeowner who wants to keep their home but who is suffering from a reduction in income and home value. This benefit is even more evident when used in conjunction with the removal of a second mortgage for debtors who have both a first and second mortgage.

A mortgage modification is a change in one or more of the terms of a mortgage, typically allowing a delinquent loan to be reinstated to “current” status and resulting in a new payment that a borrower can afford. The loan modification may be permanent or for a limited time. The modification generally changes the interest rate of a mortgage. In some instances, the term of the mortgage may be lengthened which also can help lower a monthly payment. Also, there is widely held belief that the mortgage lenders are also regularly reducing the principal balances of mortgages. In all practicaity, it is extremely rare that this happens.

The lenders have their own varying criteria for evaluating loan modification requests. Despite the varying criteria, most lenders require some sort of “hardship” (a reason why the borrower needs the loan modified). Common reasons for hardships for loan modifications include divorce, loss job, reduction in income, illness, death of a spouse, etc…

We use loan modifications as a tool to stop foreclosure and get our clients an affordable monthly payment. There are many services that have sprung up to offer loan modification services, however, there is a real difference between what they might be offering and the services we provide. The Christopher Legal Group offers real advantages over the services provided by these loan modification companies that are sprouting up seemingly overnight. As an established local law firm, we will advise you on all of your available options and explain the pros and cons of each option. Further, you will meet with and have your questions answered by a licensed attorney, not an out-of-work loan officer.

Many of the so-called professionals touting their ability to help borrowers with problem loans are either former mortgage brokers who are primarily responsible for fueling the current mortgage crisis by putting homeowners in the risky loans in the first place, or out-of-state lawyers who are not licensed to practice in Nevada. In this time of personal crisis, do you want to rely on the people who were driven by their greed to maximize their own commissions at your expense, or do you want a law firm with a history of helping homeowners get a handle on their financial crises?