Tampa Mortgage Loan Modification Attorney
Mortgage Loan Modification
Modifying your mortgage to a monthly amount you can afford sounds great in theory — and maybe one day it will be. However, the reality of it presently is that there are many downfalls to a loan modification. For instance:
- You must be able to afford the new payment to obtain the modification. Even if you otherwise qualify, the lender will look at your debt-to-income ratio to determine whether you can afford the new amount.
- The new amount may be lower; however, the payback period may be longer, which results in substantial additional interest being paid over the term of the mortgage. In a mortgage, interest is highest at the beginning of the mortgage period and decreases throughout the life of the mortgage. Furthermore, if there are foreclosure costs, including legal fees, these may be capitalized into the principle balance increasing what is owed.
- You must be behind in your mortgage or a modification is not possible. Because of this, often homeowners are deliberately not paying their mortgage payments so they can qualify for consideration for a modification. Because of the substantial number of homeowners requesting a modification, it may take months and months — or even more than a year — to find out if you qualify. If your modification is not approved, then it may be impossible to catch up on the payments and foreclosure will be imminent.
- In general, under the new Home Affordable Modification Program (HAMP) you must have an unpaid mortgage balance that is equal to or less than $729,750 for a single family home, originated your mortgage before January 1, 2009, your monthly mortgage payment must be more than 31% of your pre-tax income, as well as you must qualify for a financial hardship, and at the same time showing show you can pay the new mortgage.
- Modifications only apply to homestead property, not investment properties.
Contact the Tampa loan modification attorneys at the law office of All Family Law Group, P.A. for a free consultation to discuss your options when you are considering a mortgage loan modification.
Chapter 13 Bankruptcy
There are many benefits to a Chapter 13 bankruptcy, if you want to save your home and/or investment property and avoid foreclosure.
- Filing for a Chapter 13 bankruptcy will stop a foreclosure at the time of filing, even if a foreclosure sale is scheduled. This applies to both homestead and investment properties.
- It is not necessary to be in foreclosure or behind in your mortgage payments to file a Chapter 13 bankruptcy.
- It is possible to file a Chapter 13 bankruptcy and still modify your mortgage in the future.
- You will pay your monthly mortgage payment and repay your mortgage arrearage, if any, over either a three- or five-year plan.
- You have the benefit of discharging most of your unsecured debt, which will result in more income available to pay your mortgage.
- Most homes have depreciated significantly in value. If you have a second mortgage on your homestead or investment property which is totally unsecured from the market value of the home, it may be possible to change the mortgage from a secured debt to an unsecured debt, which can be discharged with your other unsecured debts at the end of the plan period, and you will no longer have a second mortgage payment. In essence, it allows you to keep your home and pay less.
Chapter 7 Bankruptcy
If you cannot qualify for a Chapter 13 and want to try to save your home from foreclosure, which is either in the process or imminent, a Chapter 7 bankruptcy will stop a foreclosure also, but only for a limited amount of time — approximately two to three months. If you can catch up on your payments during that time, then the lender cannot proceed with the foreclosure. In addition, the bankruptcy will discharge the mortgage debt so that, if in the future you do have a foreclosure on your home, your lender will not be able to obtain a deficiency judgment against you and there will be no income tax consequences.
Without a bankruptcy, a deficiency judgment can be obtained when the lender cannot sell the house for a sufficient amount to pay off your mortgage, and your wages can be garnished. Furthermore, if you cannot show a hardship you will have Federal income tax consequences on the deficiency.
Contact Our Tampa Loan Modification Attorneys
If you have questions regarding divorce, family law or bankruptcy, as well as foreclosure solutions, contact the law firm of All Family Law Group, P.A. We provide a free initial consultation and charge reasonable and competitive rates. Contact our firm by e-mail or call 813-672-1900. We will respond at our earliest opportunity!