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West Palm Beach Bankruptcy & Business Attorneys > > Foreclosure Attorney > Loan Modification Denied? You Have Options

Loan Modification Denied? You Have Options


For homeowners who are struggling to make mortgage payments, a loan modification can be an excellent tool for getting back on track. Obtaining a loan modification will grant the debtor more favorable terms, usually with lower interest rates and smaller monthly payments. In a sense, a loan modification can feel like a lifeboat to an individual who is fighting to stay afloat financially. With this in mind, it can be disheartening for those who have applied for a loan modification to learn their application has been denied.

If you are in this situation, it may feel as though you have run out of options for avoiding foreclosure. However, our West Palm Beach foreclosure defense lawyers are here to assure you that there are still options available to you.

Option 1: Resubmit Your Application

If you submitted your loan modification application without the assistance of an attorney, there may have been an error made within that prevented it from being approved. Some common mistakes that can lead to a loan modification denial include:

  • Missing or inadequate documentation, including those which the processor requested be resubmitted
  • Missing signatures
  • Outdated information
  • Incorrect information, particularly pertaining to income or net present value (NPV)

If you have identified one of these errors in your application, you may simply be able to resubmit the request with the required documentation and information. Of course, it is always advisable to have an attorney submit on your behalf so that further errors are not made. Additionally, he or she will be able to ensure you achieve the best terms and avoid foreclosure during the course of the process.

Option 2: Fight the Decision

If upon resubmitting your application you are once again denied, or if you did not have errors in your initial application, you might consider fighting the decision in court. First, you must determine if you are in fact eligible to receive a loan modification. This means you must be able to document a financial hardship that lead you to fall behind on payments, as well as continued financial strain. You must also still own and reside in the home, as well as either missed at least three consecutive payments or exceeded 90 days delinquency on the mortgage.

If all of this criteria has been met, and you have also met any additional guidelines provided by your lender, you may be able to successfully sue over the decision. This option is worth exploring if you can prove that the bank fabricated documents or promised you a permanent loan modification and failed to honor it. In order to determine whether you have a viable suit, it is vital to seek guidance from West Palm Beach foreclosure defense lawyers who you can trust.

Option 3: Consider Other Foreclosure Alternatives

If you were denied a loan modification, it may be best to weigh the pros and cons of other methods for avoiding foreclosure. For instance, if you are not determined to stay in the home, a short sale or a deed in lieu of foreclosure would sidestep the foreclosure process. However, you may be subject to a deficiency judgment for the amount that is not recovered by the sale of your home. An attorney may be able to negotiate a waiver that prevents the bank from doing so. If you desire to remain in your home, you should consider filing a Chapter 13 bankruptcy.

If you are falling behind on mortgage payments and are seeking a solution, turn to the team at Kelley Kaplan & Eller. With the help of one of our West Palm Beach foreclosure defense lawyers, you can plot a course of action for achieving the optimal outcome. Contact our office today to schedule a consultation for your case.

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