A mortgage company which is the owner of your loan can sell your loan to another bank that could have a completely different mortgage service managing the loan. If you happen to have a loan modification in process while the bank has transferred ownership of your loan, you may need to start the application all over. There are laws against foreclosing on your property while you are in a loan modification application process, but there is nothing that would stop a mortgage lender from selling your loan to another bank while you are in the loan modification application process. If the loan is sold and the original lender does not pass on the application to your new lender, you must request a loan modification application over again with the new lender. The major problem is that each bank/lender can have their own standards on who to grant a loan modification to. If your loan is changed over to a new bank, they may have completely different standards to approve a loan modification than the previous lender’s standards. If your loan is in default, the new lender may have different priorities than your past lender. They may want to foreclose instead of offering a loan modification.
This type of situation is yet another reminder to be careful with loan modification applications. If you can afford to keep up with your mortgage, you should not purposely hold your payments to be late on your mortgage just to apply for a modification. If you are more than 3 months late on payments of any amount, you can be placed on Notice of Default. When you are under a Notice of Default for another 90 days, a foreclosure is a real option for your lender. Once you are 90 days under Notice of Default, the lender can schedule a Notice of Trustee Sale meaning that you will receive a date assignment for when your home will be sold in foreclosure. A loan modification process can have serious repercussions. It is not a trivial process that you can just try out if it requires you to be late on payments. Many people are lulled into foreclosure with the idea that a loan modification is on the way and in process while your lender is on a completely different agenda than you are expecting.
A bankruptcy can relieve you of all of your liability after a foreclosure or a short sale occurs. A bankruptcy may also be able to save your home from foreclosure if you qualify for the bankruptcy requirements, but don’t wait until you are facing foreclosure to consult a bankruptcy attorney. You should consult with a bankruptcy attorney to help create a long term plan for protection in your future.
Bankruptcy Law Professionals is a bankruptcy law firm based in Santa Ana and Riverside. We offer free consultations with our attorneys at our Santa Ana and Riverside offices for all of our potential clients. Contact us at 855 257-7671 to schedule a consultation with our bankruptcy attorneys.