A home modification of one’s original loan through either trial modification or permanent reduction are options many homeowners, who are struggling financially, can request. Like other processes involving complicated contracts, there is a lot of confusion about modifying a mortgage contract.
Many mortgage companies are reluctant to modify contracts without clear evidence their client is in financial trouble. The first conversation with a mortgage customer service department is not always the best gauge about what a bank may eventually do for you.
Banks are also encouraged to participate in the federal loan modification programs designed to help both banks and clients through the housing crisis. Some banks do not wish to participate, while others do. This can create confusion.
Additionally some homeowners feel these financial institutions are not properly implementing modification plans. While financial institutions feel homeowners may be to blame. Some banks have stated homeowners either do not properly file their paperwork, submit a letter of hardship, or simply do not qualify. Some homeowners who have applied may have a mortgage payment that is 31% of their total monthly income, and at this level a modification would drop their mortgage obligation. When this is the case, a homeowner simply does not qualify for federal modification assistance.
There are many relationship issues between banks and homeowners which need to be solved. One of the most difficult problems arising from the loan modification attempts is what many banks refer to as “dual tracking.” Dual tracking can take place when a homeowner enters into a trial modification plan with the mortgage bank.
Trial or temporary modifications are made by banks in an attempt to help get the bank’s clients back on their feet financially. The bank may reduce the client’s payments for any time up to five years, and the temporary modification can be structured to correspond perfectly with the client’s hardship. When the client recovers from the hardship, they can afford the original payment, making up the arrears which have been accumulated.
Trial and temporary modifications are confusing because the agreements, which are temporary, are sometimes offered verbally or without legal documentation. As a result, the practice lends itself to the concept of dual tracking.
When a homeowner, who is suffering from financial problems, enters into a trial modification with his mortgage company, he makes payments based on the new modified plans for a certain time. The problems with this temporary modification have arisen when the bank accepts the payments but eventually forecloses on the home anyway. There are many reasons for the bank’s response, both negative and positive, but many look at the bank’s actions as a betrayal of trust.
Homeowners have found there are problems when either dealing with their mortgage provider, finding a payment within a modification program that is affordable enough for their particular situation, or they feel they have simply been denied an assistance plan through the federal modification program for little or no reason. Many homeowners are falling through the cracks and being foreclosed on.
Foreclosure is one of the leading causes for filing for bankruptcy. When you have tried everything to keep your home, filing for bankruptcy protection is normally your last choice. Bankruptcy laws can be complicated. If you need of relief from the stress of debt and you live in or around the metropolitan counties of Monmouth or Ocean, New Jersey, contact us at www.betterbankruptcy.com .We will help you find a bankruptcy attorney in your area who will answer your bankruptcy questions.
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