Clients often come in for a consultation panicked that their lender has gotten a foreclosure judgment or a foreclosure sale has been set by the lender. The common concern by clients is can they get a modification after the entry of a foreclosure judgment or once the sale is set.
Time is of the Essence
The answer, like many legal questions, is maybe. Outside of bankruptcy, the lender may have a loan modification package that is pending review for approval of a mortgage modification, but understand that the lender will not hurry to process the package based on the judgment being entered or the foreclosure sale being set.
If the client is going to wait until the last minute to see if the modification is approved before the sale of the home, then it is important for the homeowner to know definitely the status of their loan modification package. If the package is deemed complete and the review has been pending for about a month, a modification could be on its way. If the lender is still asking for documents, then you are at a minimum 60 days out from receiving an approval letter. Sixty days is usually more time than exists before a foreclosure sale will be completed. Once the foreclosure sale is completed, a modification is not possible since the borrower is no longer the owner of the property. In the words of the lender, there is no obligation to modify for the borrower. Only a deficiency for the lender to pursue.
Modification inside of a Bankruptcy
When a foreclosure sale is set and time is of the essence, a bankruptcy can be a good vessel for the loan modification process. The bankruptcy stops the sale and efforts by the lender to take back the property through the bankruptcy filing’s automatic stay. The bankruptcy functions to allow a borrower time to go through the loan modification process to see if the borrower can save his or her home through the bankruptcy court’s Mortgage Modification Mediation program.
The court’s program allows the lender and the borrower to take 150 days to see if an agreement can be reached through mediation. The program enables to party’s to stick to a tighter time table than traditional loan modifications because the program’s portal allows the lender and the borrower’s counsel to communicate about documents, title issues, and programs are available to the loan and borrower. Additionally, the mediations create a discussion forum to gain understanding about the loan and any modification that may be available. The open channel of communication and clarification limits the modifications that are denied based on lack of documents or technicalities from a failure to communicate.
If you have a foreclosure judgment or foreclosure sale set and want to keep your home, please call our office immediately to schedule a free consultation to see if bankruptcy and the Mortgage Modification Mediation program can help you to save your home. Our office can be reached at (305) 278-0811 or simply contact us here.