How to stop foreclosure, modify your mortgage, reduce your interest rate, and decrease your mortgage payments – Tips from a Massachusetts lawyer.
If you are behind on your mortgage payments, your interest rate is about to adjust, or your payments are simply becoming unaffordable, the first thing you need to do is take action.
The worst thing a homeowner can do is nothing. The mortgage company won't seek you out to ask you if you want to solve your financial troubles.
Sometimes, simply by calling your servicer and explaining the reason for your late payments, you can actually stop impending foreclosure proceedings and modify your mortgage.
Here in Massachusetts, the mortgage company is legally required to give you a "90 Day Notice" when you default on your payments. This notice – which the mortgage company must provide to you as a condition to starting foreclosure on your home – tells you that you have 90 days before your home can be foreclosed on, and allows you to make up the missed or late payments during those 90 days. If you get one of these notices, it is vital that you take action immediately.
If you take the rights steps (which often means getting help from a qualified Massachusetts mortgage and foreclosure lawyer), you may be able to get your loan modified at this point.
Why? Because the mortgage company wants to keep you in your home as long as it can get a reasonable payment amount from you. It knows that your loan has become unaffordable to you – but if you can prove that you can afford a reduced payment, you often will be able to stop foreclosure or modify your loan.
How to do this? The best way is to get legal ammunition. There are a variety of legal claims that you might be able to make against your mortgage company that you don't even know about. For example, did you know that if there are material errors in your HUD-1 Settlement Statement, you may be able to rescind your mortgage under the Truth In Lending Act? Or that if a broker put you into a mortgage with the intent that you refinance it in a few years, the broker may be liable for "predatory lending"?
Massachusetts has foreclosure laws that are extremely favorable to homeowners, and the Massachusetts Attorney General has been vigorously enforcing these laws against big lenders. You may even be able to get money damages against your mortgage servicer if they mismanage the money in your escrow account. The number of claims is only limited by your (or your lawyer's) knowledge of the law.
Once you have the legal ammunition you need against your mortgage company, the next step is to take your claims to them to demand a loan modification or other foreclosure assistance. If they refuse, you can take them to court. In order to get you to dismiss your claims, most servicers will allow the foreclosure to stop or do a loan modification.
So, a foreclosure isn't always inevitable when you are unable to afford your mortgage payments anymore. With the right help, a default can be the first step in getting your loan modified.