Loan Modification May Enable New Jersey Homeowners to Prevent Foreclosure and the Loss of Their Homes

New Jersey Foreclosures Which Once Took Several Years Can Now Be Completed In Six Months.

Loan Modification May Still Offer Multiple Options to Homeowners After Service of the Foreclosure Complaint.

Homeowners Seeking Modification Who Are Served With a Foreclosure Complaint Should Promptly an Attorney to Fully Explore and Utilize Their Rights and Remedies.

New Jersey has become the State with the highest rate of foreclosures in the nation.  Many of the foreclosure cases now being filed relate back to mortgages that pre-date the financial crisis of 2008;  the ‘great recession’ caused by the crisis was triggered by lenders like Citigroup, which on July 14, 2014, agreed to pay $7 billion to settle the U.S. government’s allegations it knowingly sold shoddy mortgages before the crisis.

Homeowners who were sold mortgages which included ‘ticking foreclosure bombs’ such as adjustable rates, interest-only loans, pick-up payment loans or other transactions which put them at risk have attempted to prevent foreclosure and the loss of their homes by means of a Mortgage Loan Modification.

Loan Modification agreements have allowed some New Jersey homeowners to avoid the loss of their homes. However,  many of our clients who have applied for a modification have recounted the tortured histories of their futile efforts to obtain a modification.  Documents submitted by them have been lost or ignored. The documents they resubmitted experienced the same fate.  When they attempted to contact the representative of the mortgage servicer whose instructions they followed, they were instead connected to another representative who had no record of of the documents they submitted.

Despite these difficulties, Loan Modification may still be an option available to many homeowners facing foreclosure.  Even after a Foreclosure Complaint has been filed in the New Jersey Chancery Court and served on a homeowner, the mortgage modification process may still offer several options which will enable them to avoid foreclosure.

Many homeowners are unaware of the available remedies and confused by conflicting ‘ information’ they hear and read.  For this reason the advice of an expert foreclosure lawyer is essential.

Mortgage Modification Options may include the following:

  1. Direct Application for a Modification to the Lender or Servicer.   One option, we explore with our Clients is simply, with the assistance of our experienced office, a direction application.   Many homeowners are hesitant to “apply again” based on a history of unsuccessful applications.  However, the option to do so is always reviewed as well as what issues may have lead to unsuccessful results in the past by the homeowner – whether those attempts were on their own, through a “modification company”, or even through a prior attorney.
  2. Application for a Loan Modification utilizing the New Jersey Court’s Foreclosure Mediation Program.  While more information on the Program may be found here, the New Jersey Foreclosure Mediation Program offers an opportunity for homeowners, within the context of a foreclosure, to apply for a Modification with the assistance of an appointed Mediator.
  3. Chapter 13 Bankruptcy filing.  As illustrated by the Case History below, filing a Chapter 13 Bankruptcy Petition may offer significant benefits to homeowners seeking mortgage modification. Unfortunately, many people are hesitant to consider Chapter 13 because they believe that filing a Bankruptcy means that you lose everything. The exact opposite may be true; a Chapter 13 Plan and mortgage loan modification can sometimes save a home that would have otherwise been lost.

The Case History Below Is One of Many Examples Of How a Mortgage Modification Was Used to Prevent Foreclosure.

A married professional couple retained our office after nearly eighteen months of attempting to obtain a Loan Modification from their mortgage company.  At the time of our original meeting, they were faced with a potential loss of their property despite the fact they had sufficient income to pay the mortgage.  Due to medical and other issues which were out of their control, their finances had become disorganized and they were at a loss as to where to begin.  After consultation and review of all their financial circumstances, the clients decided it was in their best interest to file a Chapter 13 Bankruptcy case.

While they had no communication with their mortgage company for nearly six months prior to the filing of the case and their property was soon to be subjected to a potential Sheriff’s Sale, within one month after filing the case, they were offered a Loan Modification.  The ability to resume their payments at a reasonable and affordable monthly amount also allowed them to restructure their remaining debts.  While certainly not common, they were offered the Modification after a single letter forwarded by this office to their mortgage company’s attorneys suggesting that the process had not been properly followed.

They were able to stay in their Bankruptcy case, reorganize all of their financial circumstances, keep their home and are scheduled to pay off all their debt.  It should be noted that we were also fortunate that the law permitted them, through the Chapter 13 case, to eliminate an unsecured second mortgage on their home.  This has allowed them a reasonable opportunity, if they are able to continue their mortgage payments, to build equity in their home as they always anticipated when it was purchased.


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