Homeowners about to enter mortgage default have a few options. If you want to remain in your home, you can ask for a loan modification. Most homeowners expect the foreclosure process to stop while the modification is in process, and in most cases, it does. However, in other instances, homeowners learn their lenders take part in parallel foreclosures, which allows the process to continue even as the modification application is considered.
These modifications can take different forms. Lenders can extend loan terms, and payments are spread over a longer time. Some lenders cut interest rates to make loans more affordable, or they reduce the principal to allow the homeowner to owe less. If your lender handles VA, FHA and other government-backed loans, and your loan originated before 1/1/2009, the lender must try to modify your loan under HAMP. If you’re found ineligible under HAMP, the lender can consider your modification under their own rules – a move which can leave you vulnerable to parallel Foreclosure in Dayton OH.
When you finance a home, you sign a promissory note that outlines repayment terms. Your home is the loan’s collateral, and if you default, your lender can take the property during a foreclosure. Every state’s foreclosure laws are different, but in most cases, the process starts after the mortgage has gone unpaid for at least three months. If you and your lender cannot reach an agreement, the lender will repossess your home and sell it to recoup some of their losses.
These are sometimes referred to as “dual track” foreclosures, and they allow lenders to process modification requests for homeowners in default, while simultaneously initiating the foreclosure process. In some instances, a lender is required to do a parallel foreclosure. Freddie Mac and other government-backed mortgage investors require lenders to do this despite a homeowner’s request for modification, because delays in the process make foreclosure more expensive.
Opponents of the parallel foreclosure process say it’s unfair to borrowers who assume that a modification request stops the foreclosure process. Others believe greed is a motivating factor, because studies have shown foreclosure is usually cheaper than a loan modification. If you are facing a parallel Foreclosure in Dayton OH, and need legal help, call the Law Offices of Scott A. Kramer today.