In this article, you will learn:
- How dual tracking plays a role in loan modification
- How various situations affect loan modification for your mortgage
- How to know when loan modification is right for you.
Dual tracking is a complicated concept to grasp. It is really just an illegal practice where the mortgage company is doing things like requesting documentation and processing a loan modification, but at the same time, pushing the home or the homeowners to do that foreclosure process. For example, say hypothetically that Jane Doe is in foreclosure or about to be in foreclosure, she doesn’t know, but she’s got letters in the mail saying you’re behind, we’re going to go forward and foreclose here if you don’t pay $30,000 by March first. So, Jane Doe panics, about to loser her home, doesn’t know what to do, goes online, and finds out “Oh, I can do a loan modification.” She fills out the loan modification, and the loan modification is applied for, but while she’s waiting to hear back, the lender goes to foreclosure current and files the case. That’s dual tracking. They can’t do both simultaneously.
If that application for the modification is complete and pending, they have to stop the foreclosure process while they’re reviewing it. If you’re already in foreclosure, and the process is going forward, they can’t go to the next stage of the foreclosure process while your modification application is being reviewed. It must stop. The only exception is if you do it in less than 30 days to foreclosure of sale.
Qualify For A Loan Modification For My Mortgage With Bad Credit
A person can qualify for a loan modification with bad credit depending on their situation. Loan modification often has more to do with loan to value than your actual credit or even your income. If you have a house worth $100,000 and you only owe $50,000, you have a good chance of getting a modification. Why? Because if you don’t pay, they’re going to be able to get recovered when they take your home because there’s a better chance they’re going to get full value if they end up completing a foreclosure. So that’s part of the puzzle.
Bad credit doesn’t always stop you. However, not having income could if you can’t verify your income, but credit itself won’t typically because you’re already in the loan with them. All you’re trying to do is make it more feasible, something you can afford.
Qualifying For A Loan Modification With Low Equity Or While Upside Down In Your Mortgage
You can qualify for a loan modification even if your property has negative equity or is upside down because you’re already in a loan with that company. They look at things in that scenario, they want to know what your income is, what your expenses are, and that you can afford what you’re proposing or they’re proposing to pay. So, it’s more challenging, but sometimes, that modification could actually have a reduction in principle. I’m not going to say hold your breath for that, but it does happen. So, it is possible that that negative balance, meaning the amount that you owe that’s more than the value of your home can be removed, so that way, the modification is reducing your overall payment to make it more affordable.
How To Know If A Loan Modification Is Right For Your Situation?
Knowing what the right choice to make is has many personal elements to it because the answer is the right choice is the one that’s right for you, the person making the decision. For some people, the ambiguity of a loan modification and going through that process to see if they’re going to get it is just too stressful. So, they opt to file a chapter 13 bankruptcy where they know they’re going to cure the default on their house and want to save their home as long as they meet certain criteria of the bankruptcy code. Much of bankruptcy code is being able to afford the payments that we’re proposing to get the house current. It’s a math formula. Can I afford it, can I do it, what does it look like on paper? I tell people frequently if you can get a loan modification that lowers your balance or lowers your payment to amount that you can afford, it’s better potentially than what’s going to happen in a bankruptcy when your mortgage payment stays exactly the same as it always has been, and on top of that, you’re going to be paying back however many payments you’re behind over a period of three to five years. So, it’s really what works with your lifestyle and your budget.
For more information on Loan Modifications in Illinois, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (847) 440-5998 today.