What to Do If Your Bank Won’t Modify Your Loan in a New York Foreclosure

by Michael H. Schwartz
Agent assessing loan modification of their house mortgage.

One method for avoiding foreclosure on your home if you are behind on mortgage payments is to ask your lender to modify your loan to make the monthly payments more manageable.

If your home loan is insured by the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA), federal law requires these agencies to work with you. However, if you have a conventional commercial loan, the bank that holds your mortgage has more leeway to refuse to restructure your loan. This could lead to further financial hardship and foreclosure on your home.

White Plains, NY, loan modification attorney Michael H. Schwartz can help if your lender has denied your request to modify your mortgage. Mr. Schwartz has a record of securing loan modifications and has never lost a client’s home to foreclosure.

Seek a Home Loan Modification in New York

A loan modification changes the terms of your existing mortgage by:

  • Reducing monthly payments
  • Reducing the interest rate
  • Converting from an adjustable (or variable) rate to a lower fixed rate.

To make these changes, the lender may:

  • Extend the term of the loan
  • Add past-due amounts (including interest and penalties) to the balance of the loan
  • Forgive past-due amounts.

For a lender to agree to modify a home loan, you must convince the lender that doing so will serve its interests. The lender wants the loan repaid, so you must show that you will no longer miss or fall behind on payments with the adjustments you are seeking.

To qualify for a modified mortgage loan, you need to show the lender that:

  • The loan is for your primary residence. Lenders won’t help with a second home or property used for rental income.
  • You have suffered a financial hardship, such as a job loss or an illness. There needs to be a legitimate reason you fell behind.
  • You can make the adjusted loan payment schedule you’re requesting. This requires financial statements that establish your income.

If the lender refuses to modify your loan, your existing mortgage will eventually go into foreclosure. This triggers a mandatory settlement conference run by the Court, in which a Court-appointed referee will revisit the possibility of modifying your home loan or other resolutions short of foreclosure.

How a Loan Modification Attorney Can Help

New York Courts are expected to work to keep people in their homes, but a mortgage lender in a foreclosure settlement conference will seek to protect its financial interests. If the lender decides to play hardball, the judge cannot negotiate on your behalf. You need a knowledgeable loan modification/foreclosure defense lawyer to advocate for you.

First, Michael H. Schwartz, P.C. can make sure your paperwork is accurate and clear, from your hardship letter, which explains why you fell behind, to your income documentation, demonstrating how you will pay the modified loan. Attorney Michael H. Schwartz can assess your financial situation and propose loan terms you can meet and negotiate with the lender.

Applying for a loan modification – unlike filing for bankruptcy – does not stop foreclosure. While you negotiate in good faith to do the right thing, your lender may be working on throwing you out of your home if they don’t believe you can make modified loan payments.

Let White Plains attorney Michael H. Schwartz bring more than 40 years of experience making your best case for a home loan modification. Call or reach out online today for a initial consultation about pursuing a loan modification that keeps you in your home and protects your financial future.