When facing the possibility of a foreclosure, try to deal with your financial situation while the problem is small.
Most people are aware of their financial difficulties well before the situation evolves into a foreclosure case. The best advice is to deal with the problem immediately and logically.
A logically approach means that you meet the problem head on with your head, not your heart. Emotional connection to the situation will only paralyze you and, in most cases, cause you to ignore the situation. That ignorance is what turns the small problems into big problems. I know this sounds easier said than done but taking a day or two and just look at the problem as a puzzle to be solve rather than a financial crisis will allow you to get you to a solution much faster while the problem is small.
So, where do you begin? First, take a good look at your finances. Most of the time, the problem can be handled by reducing your expenses. One of those expenses is your Mortgage payment. What you could do is contact your bank, explain your situation and request a renegotiation of your loan payments, a modification. What is a Modification? Well, a Mortgage is a contract agreement with the bank and includes “terms” which you may be able to change. For instance, the mortgage includes a statement that says you will make monthly payments of the principal for each month over a stated period of time (usually 30 years). Each payment also includes additional interest at a stated interest rate. These “statements” are called terms which can be renegotiated in some situations, which can bring down your mortgage payment.
For instance, the interest rate could be reduced or the term of the loan could be extended from 30 to 40 years. If you had a loan for say $100,000 at an interest rate of 3.5% and the life of the loan is 30 years. Your monthly payment would be $449.00. Remember, this is principal and interest, without taxes and insurance added. If you changed the loan to a 40 year loan and interest to 2.5%, your payment would be reduced to 330.00 per month. Regarding the insurance and taxes, you could grieve your taxes and find a cheaper insurance policy to help bring the payment down even lower. The point is, the mortgage includes terms of repayment that you may be able to change. There is never any harm in asking the to consider a modification. The worst the Bank could say is no which, if looked at logically, makes your situation no different than in you didn’t ask in the first place.
Some Banks are not as willing to modify when dealing directly a homeowners regarding modifications. This is where it may be beneficial to get someone to work with you. There are number of housing counseling agencies specifically designed to help homeowners in financial difficulties. Another place to seek help is through an attorney who handles modifications.
The most important piece of advice to be given is this…Do not just hand everything over to anyone or blindly take their advice. Whomever you go to for help, stay involved and ask questions. If someone tells you something that doesn’t sound right, get a second opinion. If you don’t you are the one that will suffer. For example, if someone at a bank or housing agency says you need to be behind or your payments in order to qualify for a modification, and they recommend that you stop making payments, run. This is very bad advice. There is no requirement anywhere that says you must be behind first in order for you to ask about a modification. And if the bank won’t work on a modification without you being behind, don’t do the modification, PERIOD.
One last point. If you can’t resolve your financial problem and the bank files a foreclosure action, pay attention to it. If you are served with a summons and complaint from the Court, answer it. Don’t ever take advise from someone who tells you to ignore it. Always answer a summons and complaint through an attorney or yourself. You can get help with answering a complaint through the Court Clerk and through New York Court’s website.
If you find yourself in need of assistance in handling a financial situation pre-foreclosure or have been served with a summons and complaint, contact the Law Office of Maggio & Meyer. Our office’s main goal is to protect your rights and create options to resolve your financial problem. At Maggio & Meyer, we believe in helping our clients before during and after foreclosure.
Please note that this series was created with New York State and its legal system in mind. The material found in this series may be applicable to other judicial and non-judicial states. However, consultation with experts in your state is recommended.