Over the past several years, I have met with numerous home owners who had fallen behind on their mortgages. In many of these cases, the homeowners have contacted their mortgage company seeking to modify the loan and stop any foreclosure proceedings. In each case, the mortgage company acted as if they would be happy to assist and indicated they would immediately be sending out a modification packet and made it sound as if a loan modification would be quickly forthcoming. However, nothing could be further from the truth.
In most of these cases, the homeowner then completed the loan modification application, wrote a detailed hardship letter, and then provided paystubs, W2 forms and tax returns. They sent all of this documentation to the mortgage company, waited a week to 10 days, contacted the mortgage company, and were then told that the mortgage company had never received any of the documentation. They sent the documentation again but this time sent it by express overnight mail so that a signature was required by someone from the mortgage company.
That was the start of lengthy waiting game. The homeowners would call from week to week only to be put off and delayed. They would be told that more paystubs would be required, that they’re waiting for the investor to make a decision, that the underwriting department was being consulted, and any other delay imaginable. All the while, the mortgage would fall further and further behind, and eventually the mortgage company would send the file over to their attorney to file a complaint in mortgage foreclosure and schedule a sheriff sale. This would lead to attorney fees for their attorney, sheriff costs for delivering paperwork, and fees for the advertising of the sheriff sale in the newspapers.
In reality, very few people actually received loan modifications, and many of the homeowners did not even find out that the loan modification had been ultimately denied until days before the sheriff sale of the house was scheduled and advertised.
There is another alternative. If you fall behind on the mortgage, a Chapter 13 petition can be filed which will immediately stop the foreclosure, stop the sheriff sale, and all other legal proceedings against the house. Under Chapter 13, the homeowner can then have up to five years or 60 months to bring the mortgage fully current. The regular monthly mortgage payment would be made each month through the Court, along with a payment over and above that which would bring the mortgage up to date over the course of 60 months. All of the uncertainty and delay is then stopped because there is no foreclosure, the mortgage does not continue to fall further behind and the homeowner knows exactly what they need to pay each month to bring this mortgage up to date and save the house. Therefore, if your mortgage is behind and you are facing a mortgage foreclosure or sheriff sale, please consider Chapter 13 and do not hesitate to give us a call to review all of your options.