What Is The Role Of An Attorney In Getting A Loan Modification?
I want to be candid in saying that an attorney is not required to submit a modification request. It is absolutely something that a consumer can lawfully do themselves. The benefit of having an attorney is the benefit of having experience. Having an attorney means having a guide who has worked through many loss mitigation requests in the past, is familiar with the lenders and what they are looking for, and can do their best to stay ahead of additional requests before they even come up. Having an attorney helps make the loss mitigation process as fluent as possible. With that said, an attorney cannot control the result.
Ultimately, the result is driven by the bank and the guidelines that they have for that particular loan. When it comes to loans, there is a lot that happens behind the curtain that a borrower doesn’t really see but that can still have a massive impact on the outcome of the modification request. For example, if it’s a Fannie Mae loan, there’s almost no chance that the borrower is going to get a principal reduction just based on who the loan owner is. Similarly, if it is a loan that is insured by FHA or VA, then that may impact different criteria for a modification.
How Long Does It Typically Take To Get A Loan Modification?
It’s difficult to set a timeline for the modification process. The reason why it’s difficult is because it can be extremely complicated for a lender to treat a loss mitigation request as completed. As a result of many banks being so large and receiving such large volumes of paperwork, it is not uncommon for documents to be incorrectly assigned to an application or to be missing altogether. In other cases, a portion of the application may be filled out incorrectly. Any of these things can cause an application to be considered incomplete.
It may take some time before the lender informs the borrower that there is some sort of a problem with the application, and by the time the borrower has deciphered what sort of information is missing, the lender may say that there is something else that’s missing, or that a document is no longer adequately current for the lender to consider it in the process. That makes this situation (which I refer to as a “merry-go-round”) complex in terms of how long the modification process will take. For some borrowers, it has taken a year or longer before the lender will actively start to process the loss mitigation request.
From the time that the loss mitigation request is treated as complete, there’s a processing time that can take anywhere from 30 days to several months. But even after the loss mitigation request is treated as complete, the second round processors (which typically are the underwriters) may ask for even more information, sending the loss mitigation request back onto the merry-go-round. Since the timeline can be ever changing, it is very difficult to generalize a timeline.
Additional Information About Loan Modifications In Florida
The one additional note that I would make with respect to loan modifications concerns the interplay between loan modifications and different legal processes. When a loan is in foreclosure, a borrower typically has an opportunity to ask for mediation, which is like a meeting with the lender. Mediation can sometimes help to encourage loan modification processing. When dealing with bankruptcies (especially chapter 13 bankruptcies), the Tampa division of the bankruptcy court offers a Mortgage Modification Mediation Program (MMM Program). This program has been very effective in encouraging modifications.
The bankruptcy court doesn’t force the lender to make a decision to modify the loan, but they do have certain tools to help create accountability for the lender to encourage them to act in good faith.
For more information on Attorneys & Loan Modifications, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (727) 538-4188 today.
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