As mortgage moratoriums begin to expire, many homeowners find themselves with a sudden and unexpected crisis. Once the loan moratorium ends, all the payments that were suspended during the moratorium are now due and payable. Some homeowners may have already taken steps to address the missed payments, either through a loan modification with the lender, or by paying the lump sum with income and savings accumulated during the moratorium period. Unfortunately, the lenders are not obligated to offer a loan modification, especially if there has been a long-term or permanent decrease in income which will jeopardize the ability of the homeowner to make future payments. Likewise, if the loan payments were delinquent before the pandemic, or if the homeowner has already obtained multiple loan modifications, the lender may not be willing to negotiate a new one. If the lender is not willing to modify the loan, and the homeowner has no way of paying the past due payments, the next step will be for the lender to foreclose on the property. FORECLOSURE While the filing of a Chapter 13 bankruptcy Chapter 13 bankruptcy can prevent a foreclosure, it is very important that a homeowner not wait until the last minute to seek a bankruptcy consultation.

If your mortgage moratorium is about to expire, you can improve your chances of a loan modification MORTGAGE LOAN MODIFICATION UPDATE by doing the following:

1 – Go ahead and assemble all of the documents that your mortgage lender will need to consider, including income tax returns, paystubs, and/or bank statements if you are on fixed income.

2 – Carefully read all of the communications that you receive from your lender and follow any instructions that are given.

3 – Be mindful of any timelines that your lender imposes on you so that all documents and information are provided in sufficient time to allow your lender to evaluate a mortgage modification.

4 – Clarify if you need to resume your mortgage payments once the moratorium expires, but before a loan modification is finalized. Do not send partial or incomplete payments without specific permission from your mortgage company.

5 – Even if you are approved for a loan modification, there will usually be a 3 month trial period in which you will need to make payments as directed by your lender. Failure to make these payments during the trial period can result in the loss of the modification and potential acceleration of the loan.

If you are unable to negotiate a satisfactory and affordable loan modification, or if your lender denies your request for a loan modification, then you will have to come up with all of the payments missed during the moratorium. If this is not financially possible, then the next step for a mortgage lender will be to start the foreclosure process. If you receive letters threatening foreclosure, you should contact a local bankruptcy attorney at once. The attorney will need to review the same information that you would provide for a loan modification, as well as any communications that you receive from your mortgage lender. Avoid any foreclosure rescue scams, or any third parties who request money from you and advance in order to negotiate a loan modification.