Friday, June 22, 2012

Is Strategic Default the Best Path to Loan Modification?

Question: We are looking for a strategic default because we got no help in adjusting our mortgage down to reflect the drop in value of our home. We have called the bank many times over several years. We can afford the payment, but our payment is scheduled to go up in the future and the house doesn't justify the cost. We have inquired about merely getting our rate down to going rates and every time no matter what new so-called loan modification program exists have been told you have to initiate default by missing a payment for the bank to even start discussing it with you. Should we get legal assistance in the strategic default process?

Response: Numerous factors come in play here. It is true that most banks will not even consider you for a loan modification unless you missed three (3) payments. But if you miss three (3) payments, then you have to beware that you are at risk of foreclosure. If your current mortgage payments are affordable, then you may not even qualify for a loan modification. Loan modification is not automatically granted. You must submit documents; the bank reviews them; and if you qualify, you may get a loan modification. Certainly, you could be risking a lot more. If your credit history is good, then you should try to refinance and you can still get a good market rate today. If you decide to try for a loan modification, consult with a professional in advance to ensure that you qualify.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information.
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