Is there any homeowner out there these days who is not afraid of mortgage foreclosure? So many people have gotten "deferrals" and "forbearances" on their mortgages for maybe 12 months or even more. It sure is great to live in your house without paying your mortgage, but unfortunately that sort of thing doesn't last forever. So what is going to happen when the mortgage company says its time to pay back all those payments that you haven't paid for the last year or two? Well, as of now, I don't know if anyone knows the answer to that question for sure. But here are some of the possibilities:
The mortgage company could say that you don't have to pay back all of the payments until the mortgage matures. That means that you won't have to pay all of that money back for maybe 20 or 30 years. That will sure be a pretty good deal, and if the mortgage company offers you a deal like that, you probably ought to take the deal, especially if they aren't charging you any additional interest. Of course I would always suggest that you speak with an excellent attorney before you make a final decision.
The mortgage company might say, "You know what, we'll offer you a modification. We'll extend your mortgage for a new 30 year term, we'll lower your interest rate, and we will lower your monthly payments. So forget about the 12 months when you got your forbearance, all of that will be incorporated as part of your monthly payment over the course of the next 30 years." Now that doesn't sound too bad, but there might be a catch to it, and it would be wise to speak with a knowledgeable attorney before you sign the modification agreement. One reason you might want to consult with a lawyer is because there could very well be some additional costs and fees and hidden charges that you might not be aware of. This could be very important, and you could be making a big mistake if you sign a document that you don't fully understand. I would therefore recommend that you definitely consult with a knowledgeable lawyer before you sign any loan modification documents.
The mortgage company might say, "OK, you are 12 months behind because of the forbearance. We want you to pay that back, and we will give you 5 years to pay it back. So you will therefore pay us an extra payment every month, in addition to your regular mortgage payment, and then in 5 years you will be all caught up. After that, you will just continue making your regular monthly mortgage payments, and nothing else. This may or may not be a good deal. I suggest that if you get an offer like this, you consult with a lawyer who knows how to deal with mortgage companies before you sign any documents that you might in the future be sorry that you signed. Before you sign any legal documents on any subject, in my opinion, it's always smart to discuss what you are about to sign with an attorney, and please make sure that you understand what you are signing.
The mortgage company might say something that seems scary to you. They might say, "OK, you have had your forbearance for 12 months, and now your free ride is over. We can't afford to keep giving you this free ride. We will give you 6 months to pay back what you are behind, otherwise, we will foreclose on your home and we will take your home to a sheriff's sale. Now that can sure be scary, especially if there is no way that you can pay back that money in 6 months. So, I'm here to tell you that if the mortgage company gives you this option, or an option that is even worse, you still have the ability to avoid foreclosure, so don't be afraid of foreclosure.
Here Is Some Good News if This Happens to You:
There are ways to stop this potential foreclosure:
If you get served with a foreclosure complaint, take it seriously. Take the papers to a lawyer and let him help you fight the foreclosure. This way you can delay the foreclosure case for a year or longer, and you might even get the case dismissed. I know clients who have hired a lawyer to fight the foreclosure and the net result was excellent because after a few months they were able to achieve a really good settlement with the mortgage company, or they were given a very favorable modification.
Be aware that in the near future the State of New Jersey will be helping homeowners to pay their mortgage arrears. New Jersey has been given about $325 million by the federal government, and this money will soon be available to help homeowners pay their mortgage arrears. New Jersey may also have money to help some homeowners pay their future mortgage payments for a year or two. This is a really good deal because this could be the equivalent of "free money for homeowners". As of mid May, 2021, this is a very new program, and we are waiting for detailed guidance to be supplied by the State of New Jersey as to how and when this money will be available to the public. So stay tuned, and I will keep you updated as we obtain more information on this program. I believe this program will help a lot of people save their homes from foreclosure, and it could very well prove to be a beautiful blessing from heaven to thousands and thousands of New Jersey homeowners.
Another thing you can do if you face foreclosure is to ask the mortgage company for a loan modification. If they give you a modification they might lower your monthly payments and your interest rate, and that is usually, but not always a pretty good deal. The bad part could be that the mortgage company extends the remaining years on your mortgage payment. For example, maybe you have 20 years left on your mortgage payments, and the mortgage company makes it 30 years. So do the math, because maybe they are lowering your payments, but when you figure out how much it will cost you over 30 years, it could be a whole lot more than it is costing you by keeping it at 20 years. Usually, the best thing to do is to have a knowledgeable honest attorney review the paperwork that the mortgage company is asking you to sign. You want to make sure that you understand what you are being asked to sign, and you want to know how much a modification is actually going to cost you, and whether it is a good deal or a bad deal. There is an old saying that "all that glitters is not gold", so please be careful.
If the mortgage company is not giving you a deal that you are happy with, then you can file a chapter 13. We have many blogs and videos that will educate you and give you a lot of helpful information on Chapter 13. You can accomplish a lot in Chapter 13, and you can get 5 years to pay back the arrears. Check out our blogs and videos for more information, or give us a call at 856 696 8300 for a totally free in depth evaluation of your situation. We're here to help, and I love being the Underdog Advocate for my clients. I love to take on and fight against the big mortgage companies and big banks. It reminds me of David vs. Goliath, and of course we all know that David won, and he won easily.
Blessings to all.