Tag Archives: foreclosure

Home Loan Modifications to Prevent Foreclosure

Posted on by Tucker Clagett

What is a loan modification (also called mortgage modification)? What does it really mean? Is it right for me?

You may have heard it called loan modification, mortgage modification, mortgage restructuring, or something else entirely. But it means the same thing. A loan modification happens when a debtor who is in bad financial shape works with his or her mortgage holder to restructure the mortgage so they can afford to make the payments. If the loan modification does not work out, the homeowner has to face the prospect of foreclosure and bankruptcy.

The new plan you agree on may be temporary or permanent. It may change some or almost all of the terms of your original mortgage. The goal for the individual is to get your mortgage payments down to 31% of your gross income. The goal for society is to stem the flood of foreclosures.

You should see our Foreclosure Resource Guide in the Free Legal Information section of our website for more details.

As you might imagine, it is a complex process of negotiation and there is a lot of number crunching involved. Our attorneys are doing a lot of loan modifications now, and we find it is frustrating to negotiate terms with clerks on the other end who seem unable to really negotiate and make the best decision for all of those involved. These can be very difficult negotiations.

You should be careful about trying to negotiate a mortgage modification by yourself. You should hire an attorney to do it for you. That is what we recommend. At the very least, the attorney makes the lender aware that they really do have to make a deal with you, or else you will be filing for bankruptcy. The same threat does not exist if you are doing the negotiations yourself.

Remember, we offer a free consultation, if you are worried about foreclosure, so it doesn’t cost you anything to find out what your options are, and get some good guidance beyond what a blog can provide.

More information about foreclosure:

Charles County: A Leader in Bankruptcy Filings

Posted on by Tucker Clagett

No, that is not a headline that you want to see. It is definitely bad news. But the Maryland Independent’s top story for Friday, May 20 was “Charles Topped Maryland in 2010 Bankruptcies”. The rate of bankruptcies was 7.59 for every 1000 residents of Charles County. In 2009 there were 6.1 bankruptcies filed for every 1000, and in 2008 there were 4.5 bankruptcies filed for every 1000 residents.

Andrews, Bongar, Starkey & Clagett is one of (if not the) busiest firm for bankruptcy filings in Waldorf and Charles County. Our attorneys have filed a lot of bankruptcies since 2008 when the economic crisis hit, and last year was no exception. The story of Waldorf bankruptcies is a simple one: When the economic crisis hit, and real estate prices fell, people just couldn’t afford the payments on their house. Mortgage rates went up, and that adjustable rate mortgage (ARM) that looked so promising when you purchased the house was suddenly more than you could afford.

If you bought your house at the height of the real estate market, or close to it, it was now worth much less than what you paid for it. Sometimes, the value was cut almost in half. When your mortgage is more than the value of your house you are “upside down.” You cannot sell it, and cannot afford it. Foreclosure is on the horizon.

What can you do? Bankruptcy is often the only solution. You have to walk away from the house and deal with the big debt through a chapter 13 or chapter 7 bankruptcy filing. Loan modifications are recently becoming more popular too. In order to avoid a bankruptcy, sometimes your lender will modify the terms of your mortgage to make it affordable.

Our website has several free legal articles explaining bankruptcy, foreclosure, loan modifications, and short sales. Take a look at that information if you think you may need it. We also offer a free consultation for bankruptcy cases, or any of these other legal matters.