If you are unable to make your house payments based on the current terms of your mortgage loan, you may be facing foreclosure. Foreclosure is not something that you ever want to happen, both because of the loss of your house and because of the damage to your credit. If you do not wish to keep your home that you are in danger of losing to foreclosure, it is a far better choice to pursue alternatives such as deed in lieu of foreclosure or even a short sale. This will allow you to get out from under your mortgage obligations and give up the home without destroying your credit in the process.
If you wish to keep your house, however, then your best options for avoiding foreclosure are to pursue a mortgage modification in order to make your payments affordable. In Alexandria Virginia, you have several different options to consider, including speaking to your lender about mortgage modification programs. Filing for bankruptcy protection could also help you to keep the home and avoid having the lender foreclose.
Mortgage Modification Options
Mortgage modification means having the bank or lender who holds your mortgage note make a change to the loan obligation. The change may involve simply lowering your monthly payments, or it could involve lowering your interest rate or reducing the principal balance on the home. Most mortgage modification programs exist as part of the federal homeowner’s relief law that was passed, which created the Making Home Affordable (MHA) program. The MHA program provides different mortgage modification solutions including:
- The Home Affordable Modification Program, which lowers your monthly mortgage payment so it falls below 31 percent of your monthly pre-tax income.
- The Principal Reduction Alternative, which actually reduces the balance on your mortgage loan to what your house is worth rather than what you currently owe.
- The Second Lien Modification program, which provides relief from second mortgage debt by allowing for the modification of secondary mortgage liens or home equity loans.
- The Home Affordable Refinance Program, which makes it possible to refinance mortgages that you otherwise would be unable to refinance because you owe more than the house is worth.
To modify your mortgage using any of these programs, you will need to speak with your lender about qualifying and beginning the modification process.
Bankruptcy and Mortgage Modification in Alexandria Virginia
In some cases, you will not have time to negotiate a mortgage modification if foreclosure is imminent. Bankruptcy may provide a solution in these circumstances. Bankruptcy results in an automatic stay going into effect and preventing collections activities, including foreclosure. After filing bankruptcy, you can negotiate a modification agreement with your lender. A bankruptcy filing can also allow for second mortgages to be reclassified as unsecured debt and included in a chapter 13 repayment plan under some circumstances, while the relief from your debts that are discharged in chapter 7 bankruptcy could make it possible for you to better afford your mortgage.
An experienced Alexandria Virginia bankruptcy attorney can help you to understand whether bankruptcy could be a viable solution to modify your mortgage or stop foreclosure.