Below are a few questions many homeowners may have about loan modifications and the loan modification process. It is important to keep in mind that while the Attorney is there to help their client, certain laws and regulations on the loan modification business prevent them from predicting or estimating the loan modification results. Additionally, Attorneys will generally shy away from advising their clients on when to make their payments or whether they should make them at all.
The information below is intended as general information to help homeowners get a feel for the process. It is not intended to be legal or financial advice. Since everyones situation is unique I advise borrowers to contact an attorney personally for information specific to their situations.
1. If I am trying to get a loan modification and I am already behind on my mortgage payments and I just received a Notice of Intent to Accelerate, should I make a payment? (I have a first and second on my home and I am behind on both)
If the first mortgage is the one that has produced a Notice of Intent to Accelerate (the first step to foreclosure, generally after you are 60+ days late on payments), then any payment you chose to make should be towards your first. Making a payment will not affect the probability of being approved for a loan modification, although the bank may still count you late on payments as they may use your payment towards late fees and penalties before it is ever counted towards your payments.
2. How long do I have before my house is sold at a foreclosure sale/auction?
This differs depending on state law, but in California after 60 days late the Lender will issue a Notice of Intent to Accelerate. This notice gives the borrower 30 days to come current on the loan or additional steps will be taken. After the NoI, the Lender will file the Notice of Default. In California, the Lender must wait 3 months after the NoD filing before filing a Notice of Trustee Sale (NTUS). After the NTUS is filed, the sale date of the property can take place no sooner than 14 days after the NTUS filing date. Basically, in California you have around 4 months after receiving the Notice of Intent to work something out with your Lender.
3. Should my loan modification be declined, will my Lender allow me to cure the default right up to the foreclosure sale date?
As it is with any mortgage default, you have the opportunity to cure the default by paying, in full, the total of all delinquent payments, late fees, penalties, recording & other legal fees, escrow advances, etc. , in one lump sum, no later than 5 business days prior to the auction date. Even if you begin making your regular payments again, it is possible the Lender will proceed with the foreclosure as they have incurred additional expenses throughthe foreclosure process.
4. Will my Lender accept late payments from me and move all late fees, past payments and penalties to the back end of my loan?
Your Lender will only move missed payments and additional charges to the back of your loan through a loan modification. Once the Notice of Default has been recorded the Lender has incurred additional expenses to start the foreclosure process and will expect to be paid back for these expenses.It is very important for the borrower to keep track of all correspondence with the bank. They will usually send out notices every step of the way along the foreclosure process and the notices will contain what needs to be done to foreclosure process even if the borrower is trying to negotiate a loan modification. An Attorney can help stop this process while the loan modification is being negotiated.
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