Across the country, moratoriums have been placed on eviction and foreclosure proceedings as a result of the COVID-19 crisis. At the end of August, the Federal Housing Finance Agency (FHFA) announced that it was extending the foreclosure moratorium for federally-backed single-family home mortgages until the end of the year at the earliest. The moratorium was set to expire on August 31, but the FHFA recognized that many homeowners still face serious struggles when it comes to making their mortgage payments. While non-federally-backed mortgages are not directly affected by the moratorium, most private lenders have followed suit and are holding off on foreclosure proceedings for the time being.

If you have fallen behind on your mortgage due to difficulties caused by the COVID-19 lockdown, you are probably not going to face foreclosure in the immediate future. You will, however, need to get caught up, as foreclosure will be a possibility at some point down the road. In order to bring your mortgage current, you will most likely need to request a loan modification. Most lenders are willing to work with borrowers who ask for a loan modification, but the application process can be challenging and confusing. In fact, it is not at all uncommon for a borrower’s first request to be denied. The good news is that a loan modification denial is not the end of the story.

A Denial Is Not All Bad

Being told no always hurts a little, but having your application for a loan modification denied can be scary. After all, if the lender will not agree to modify your loan, how will you ever get your mortgage back on track? The most important thing to do after a denial is to keep the bigger picture in mind.

First and foremost, applying for a loan modification demonstrates to the lender that you are serious about getting caught up and keeping your house. If foreclosure proceedings were to eventually happen, your efforts would also be noted by the court. In most cases, submitting a loan modification request extends the foreclosure timeline as well. While the bank is considering your application, foreclosure proceedings are usually put on hold, and you will not be seen as ignoring the problem.

Turning a No into a Yes

The other primary way in which a denial can be useful is that it can help you learn what the lender is looking for in order to grant the modification request. When a lender refuses a modification request, they will almost always provide specific reasons why your application could not be approved. Finding a good place to start can be tough, but a denial actually offers you one. Using the reasons for the denial as a guide, you have the chance to restructure your application and start again. If you can adequately address all of the lender’s concerns, you stand a much better chance of having your resubmission approved.

A Libertyville Loan Modification Lawyer Can Help

If you have recently received a denial of your loan modification application, it is important to seek help quickly. You may only have a limited amount of time in which to file an appeal or a corrected application. Contact an experienced Lake County mortgage modification attorney at Newland & Newland, L.L.P. to get the guidance you need today. Call 847-549-0000 to schedule a free consultation.

 

Sources:

https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Extends-Foreclosure-and-REO-Eviction-Moratoriums.aspx

https://www.mortgage101.com/article/what-to-do-if-loan-modification-was-denied/

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