Don't panic! You may be able to appeal the decision, or find another option fits your needs better than a Chicago loan modification.
In the last six months, inflation has hit levels not seen since 2008. With costs skyrocketing, your current paycheck may no longer cover basic expenses. For thousands of residents, a Chicago loan modification could lower the mortgage payment due each month. If you’ve gone to your lender and they rejected your modification, you may have other options.
What’s the Status of the Illinois Housing Market?
Homeowners with high levels of debt often resort to selling their property to get some breathing room and lower debt to income-ratios. However, higher interest rates mean higher mortgage rates in today’s real estate market. As a result, fewer people can afford to buy a home. This situation might leave homeowners in danger of foreclosure. One of the most common ways to avoid foreclosure is a loan modification.
What is a Loan Modification?
Refinancing means you have a new mortgage with different terms. A loan modification refers to changes made to the terms of your current loan. The changes might include:
- Changing the loan type from an adjustable to a fixed rate
- Extending the length of the loan
- Changing the interest rate
There is no one-size-fits-all modification. Several different types of programs exist, and each has its own qualification requirements. FHA and VA loans often have home loan modification programs for eligible borrowers.
Why Was My Request for a Loan Modification Denied?
Applying for a loan modification in Chicago is typically not a quick, easy process. Collecting and submitting the information needed, including personal data, takes time and effort. There are many reasons your lender might deny your request for a loan modification, such as:
- You have already received loan modifications
- You did not make 12 consecutive payments on the original loan or current modification
- You cannot afford the modified payment
- You have an incomplete or untimely application for a loan modification
However, it is not uncommon for a loan modification denial due to servicer errors or violations. Federal regulations protect borrowers from fraudulent activity, and servicers must meet specific requirements when denying a modification request. These requirements include:
- Failing to advise you within five days of receiving the application that more information is needed
- Failing to decide within 30 days of receiving a complete application for a loan modification
- Scheduling a sheriff sale or applying for a Final Judgment while the application is reviewed
- Advising you that you must be in default to apply for a loan modification
Your modification could also be denied if you have a poor loan-to-value ratio. According to the Homeowner’s Rights Act, your lender must notify you of your legal options and rights if they decide to foreclose.
Can I Appeal a Loan Modification Denial?
If you received a denial notice in the mail, don’t panic. You still have options and time. The law requires the lender to tell you why it denied your request. This gives you the opportunity to write an appeal letter or restructure your application and try again. If you address the lender’s concerns, you have a higher chance of being approved the next time.
Submitting a complete loan modification request demonstrates that you are committed to keeping your home. If you go to foreclosure proceedings, the court will also note this. In many cases, it can extend the foreclosure timeline, giving you more breathing room to work things out.
Chicago Loan Modification Lawyer
The thought of losing your home can be stressful, taking your focus away from other areas of your life that need attention. If you received a denial letter from your lender, it’s critical that you act quickly. Kevin Benjamin is an experienced Chicago attorney with decades of experience helping clients avoid foreclosure. He can determine if a loan modification is your best option and negotiate terms with the mortgage holder.
If the lender violated your Homeowner rights, Kevin can act in your best interests and challenge their right to deny your application. Contact him or call at 312-853-310 and schedule a free, no-obligation consultation today. It costs you nothing and could help you keep your home.