Foreclosures 102: Loan modifications vs. forbearance vs. Short sales
July 16, 2019
Home in Queens, NY Under Foreclosure

The joy of owning your ‘own’ home is insurmountable.  Most people aspire to acquire that their dream home, a place they can call home, live with the partner and raise great kids in it. Howbeit, most of these homes seem so expensive to buy and may require long time investment on savings to make up the money for it. To this effect, opting for mortgage loan seems to be the most feasible way to acquire such. But you have to bear in mind the risk of foreclosure when you fail to meet up to the mortgage payment schedules.

A mortgage loan modification is simply changing the terms of the loan agreement between two people (a homeowner and a lender). Most often, the goal of modification is usually to lower the monthly mortgage payment; the lender usually requests this if he/she has a good reason behind it, at times the major reason is if all equipment in the house is not functioning properly. The lender in turn after looking at the reason may decide to agree and modify the mortgage by lowering the interest rate, reducing the amount of the principal (though in rare cases), or extending the loan term. If the homeowner is already in default, then the lender may agree to add any overdue mortgage payments to the outstanding principal. The payments which are overdue can then be repaid over the term of the loan or in a single balloon payment at the end of the loan term.


By law, signing a mortgage signifies that you’ve consented to pay the lender back, in full, for the loan, and also you’ve agreed to do so in line with their terms. Whenever you stop making payments, you’ve breached that agreement. For that reason, the lender holds the right to take back your home and seek to recoup the investment. The approach of them repossessing your house is referred to as foreclosure. Whenever you’re a couple of days late on your mortgage payment, don’t panic. The bank or homeowners won’t come for your home immediately. A good number of lending organizations offer a 15-day grace period that may not have a late fee attached. It’s only when you’re unable to meet up to expectation for 90 days before foreclosure cases commence. From that point, the process may take between two to twelve months, based on where you reside. Considering the lengthiness of the process involved, you will always find time to make adjustments and to hopefully retain your house.

Several influences can put a homeowner at foreclosure risk and incapable of meeting up to his or her loan expectations.  Health crisis can leave them with hefty medical bills that eat up their available funds. Some may lose their jobs and hit financial bankruptcy; while others, due to poor financial planning may go for a home far above their expected income which may be blamed on unfavorable economic outplay.

Irrespective of why it happens, foreclosure is an awful experience. Losing your home is terrifying and demoralizing, especially when you lose it because you couldn’t meet up with the payments; it is possible to feel as though it’s your fault. The psychological impact of foreclosure is worth looking into. And to make situations uglier, a foreclosure seriously affects your credit score, which makes it considerably difficult to be able to procure another home in the future. If perhaps you’re going through this problem, it would be wise to do everything you possibly can to prevent it. There are various ideas for cash-strapped homeowners to avoid a foreclosure or at least protect themselves from some of the foreclosure’s horrible consequences.



With a loan modification, your lender is willing to modify the conditions of your mortgage to make the payments more affordable. Take, for instance; the lender may decide to decrease the interest rate, change your loan from adjustable-rate to fixed-rate, or even lengthen the term of the loan. One of the outstanding benefits of loan modification is that applying for one temporarily halts the foreclosure procedure, allowing you to have some more time to save your home.


As long as you haven’t fallen behind on your mortgage payments by over a month or two, you still have an opportunity to get back on track. If you can work towards generating extra cash, well then, all hope is not lost.

Listed below are some methods to raise funds quickly.


Begin by getting rid of all the extras in your budget, in case you haven’t currently. Terminate your cable TV, scale down to a less costly cell phone plan, adjust your workout plan, quit drinking bottled water, and also reduce the number of times you go out to eat, or you strike them out from your to-do list if possible.

If perhaps that’s not enough to close the gap in your budget, it’s time for you to proceed to more extreme strategies. Seek out tips to slash your grocery bills, find out inexpensive healthcare, and perhaps give up using your car. Trust me tightening yourself this much is agonizing, but it’s much better than losing your home.


Search your home for anything that is of less value to you that you could sell off to raise some cash. High-value items like jewelry, electronics, collectibles, tools, musical instruments, and some furniture or a second car, for the time being, you can make do without them. There are various ways to sell your stuff; you can take them to a pawn shop, post them on Craigslist or sell them on eBay to raise some substantial funds.


This is where the lender offers you a new loan with new interest rates and terms backed with a sole purpose of covering the missed payment schedules, and your debt on the home.

Refinancing your home loan is usually the best alternative to foreclosure. It offers several advantages.

  • Least Impact on Credit

Obtaining a new loan often dings your credit score slightly; however, the drop is only temporary as compared to other alternatives such as a loan modification, short sale, or deed in place of foreclosure. A remortgage should do the least damage to your credit rating in the long term.

  • A More Affordable Loan

Refinancing your home substitutes an unaffordable loan with an affordable one. You can leverage on refinancing to make mortgage payments at your most convenient budget estimates, instead of extending it to the limit or beyond.

  • You Keep Your Home

Above all else, refinancing means that you can keep your home. You’ll be required to go through a handful of difficulties filling out the documents. Nonetheless, that’s significantly less hassle when compared to transferring to a new home.


In some instances, the financial crisis that’s putting your mortgage payment away from your reach is just temporary. For example, perhaps you’ve lost your job, but you know, you’ll be starting another in a few months. Or possibly you have health issues which have left you temporarily unable to work.

In a scenario such as this, a forbearance agreement can help you until you are able to bounce back. Under these offers, the mortgage lender affirms to decrease, or even suspend, your mortgage payment for a set period. In addition to that, they can also pledge not to foreclose on the property within this period. In exchange, you assert to paying fully for the mortgage once you find your feet, along with paying extra to catch up on the missed payments.


If you find yourself at risk of a foreclosure as a result of the inability to meet few mortgage payments schedules due to temporal hindrances, but you can now tender to schedule, a repayment plan provides you with an approach catch up and avoid foreclosure.

In a repayment plan, your lender adds up all the payments you’ve missed and then divides the total into small chunks that are added to your regular mortgage payment over a fixed period.


If you can’t afford your home any longer, the ideal choice would be to sell it. The challenge here is that whenever estate value declines, your ROI in selling the home will be lower than the amount you are obligated to repay on your mortgage, leaving you still in a mess. In this case, selling your home for less than the amount you have left on the mortgage is likely the best solution. If your lender agrees to it, you can sell the house, walk away, and begin all over.

Award Winning Foreclosure Defense Solutions Are Now At Your Fingertips. Call Or Visit Us Today at Two Convenient NYC locations:

Empire Foreclosure Defense 70-50 Austin St, Forest Hills, NY 11375 (718) 673-2294

Empire Foreclosure Defense 131 west 169 st Bronx, NY 10452 (347) 220-8559

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