Have you tried to modify a mortgage loan with your lender only to realize that the only thing that is being modified is your mood (i.e. optimistic to incredibly frustrated)? The common things that I hear from my clients about their attempts to modify their mortgage loan include:
- “The mortgage company keeps saying that they don’t have paperwork that I KNOW I sent in.”
- “I have been trying to modify my loan for over a year, and now my house is in foreclosure and is scheduled for a sheriff’s sale.”
- “If I could only talk to the same person more than once!”
- “I sent them all the paperwork that was requested weeks ago, and now they are saying it is outdated. That wasn’t my fault!”
If this sounds familiar, there may be something we can do to make life easier.
“Wait, you guys are bankruptcy lawyers, how can you help me get a loan modification?” The answer is that the United States Bankruptcy Court for the Western District of Pennsylvania has instituted a program by which you can apply for a loan modification within a Chapter 7 or Chapter 13 bankruptcy case.
Under this program, once you file for bankruptcy, you also file documents to enter the Court’s loan modification program. The difference between this program and attempting to do it on your own is there is Court supervision over the process. So, what does that mean? It means that a bankruptcy judge is overseeing the process to ensure that the lender makes a “good faith effort” to modify the loan. If they don’t do so, the Court can take action against the mortgage company. Further, all documents are uploaded and transmitted through the bankruptcy Court may be viewed by both the lender and the borrower. Gone are the days of the mortgage company claiming that “they didn't get something." The Court will make sure the process moves along at a good pace, and that any foreclosure activity is halted in the meantime.
Can the Court force the mortgage company modify the loan? No, it cannot.
Do you have a good chance to get a modification through the bankruptcy Court’s loan modification process? Yes!
The odds are much better in a bankruptcy than out of a bankruptcy that you will be approved for a modification. The Court’s program has a current success rate of right around 50%. Steidl and Steinberg currently has a success rate of closer to 75%.
As always, call us at Steidl and Steinberg and we can look into your situation and see if the Bankruptcy Court’s loan modification process could work for you.