At the Settlement Conference
You have the right to –
- Have an attorney, advocate, family member or friend assist you;
- Ask for explanations of anything at all;
- Request an adjournment of the conference if you have a valid reason for being unable to attend;
Request copies of the following –
- Your Mortgage;
- Your Note;
- A detailed account of all fees and charges applicable to your loan; and
- Your payment history; to enable you to review the payments you’ve made, and when they were made.
Take advantage of the Settlement Conference, because this is your opportunity to share your story with the Bank and the Court. Do your preparation before the Conference, and tell your story in a way that everyone can understand. You must explain why you’re in foreclosure and what steps you’ve taken to resolve the situation. Be very clear, and this will make it easier for all parties to resolve the foreclosure.
Write out some of these sample questions –
- Give the reasons as to why you’ve fallen behind on your mortgage;
- What steps have you taken to try and keep your home; and
- Are there any terms of your loan that are different to what you were originally promised.
A Loan Modification
If, in fact, your loan can be modified, there are a few different ways your Bank might approach it: they could do any of the following –
- Reduce the interest rate;
- Increase the term of the loan;
- Change from an Adjustable Rate Mortgage to a Fixed Rate Mortgage; or
- Forgive portion of your principal balance.
However the Bank decides, they’ll typically modify a loan through ‘capitalization’. This occurs when items owing on a loan, like late charges, taxes, legal costs, past due interest, and so on) are added on to the unpaid principal balance and thus become part of a new principal balance.
The positive side of a capitalization is that all current outstanding fees and charges are rolled over into the unpaid principal balance, so the borrower now becomes current on their mortgage payments. Therefore, by doing a capitalization, it’s not necessary for the homeowners to make up all the missed payments at one time.
Your new agreement should very clearly show how much you owe, what your new interest rate will be, what your monthly payments will be, what each charge is for, how long you’ll be making payments, and the outcome should either side violate the agreement. You should request a written explanation of all charges that apply to this loan modification and also request that late fees and attorney’s fees be waived, or at least reduced.
Contact George Russo and Associates if you require any assistance at all with legal documentation, or understanding the Foreclosure process. We’re here to help you, so please don’t hesitate to give us a call. And remember- we offer obligation free advice!