With the federal government encouraging loan modification for borrowers who might be upside down on their mortgages or defaulting towards foreclosure, many lenders are caught wondering whether they should foreclose, modify or both. Before the lawsuit settlement between 49 states and the five largest mortgage lenders, banks would routinely pursue foreclosure while at the same time considering loan modifications for their borrowers. This was confusing to people. Consumers who thought they were in the process of a loan modification found they were receiving foreclosure notices, and others who were fighting a foreclosure had no idea that a modification of their loan might be on the table.
In Florida, the rules are different depending on whether a foreclosure has already been filed. If a homeowner is struggling, but a foreclosure has not been filed yet, the bank can offer a loan modification within 120 days of delinquency. If a foreclosure has already been filed, the lender has five days after the official foreclosure filing to invite the homeowner to apply for a loan modification.
While the rules put in place by the mortgage settlement are meant to make the process of foreclosure and loan modifications clearer for consumers as well as lenders, there are particulars and timelines that must be followed. Consider consulting a Florida foreclosure attorney before taking any action. Stephen K. Hatchey, a Florida foreclosure attorney, can guide you piece of mind. To receive a free consultation, contact our offices at 813-549-0096.