Loan Modifications Versus Foreclosure: How To Use Ohio’s Loss Mitigation System To Stay In Your Home
Are you facing the possibility of foreclosure? If so, you likely know this is one of the most stressful experiences a homeowner can face. In Ohio, thousands of families confront the prospect of losing their homes each year. This is due to financial hardships created by job loss, medical bills, or other unexpected life events. Fortunately, there are legal tools that you can use to help you stay in your home. One of the most effective is pursuing a loan modification through a process known as loss mitigation.
Understanding loan modifications
Basically, a loan modification is an agreement between you and the mortgage lender that changes the terms of the loan so that your monthly payments are more affordable. Instead of refinancing with a whole new loan, a modification adjusts your existing loan. Common changes include:
- Lowering your interest rate
- Extending the length of the loan
- Adding missed payments to the loan balance
- Converting an adjustable-rate mortgage to a fixed rate
Such adjustments can significantly reduce your monthly payments, giving you some breathing room while you regain financial stability.
How loss mitigation works
Loss mitigation refers specifically to the options lenders must consider before they move forward with a foreclosure. Federal law requires mortgage servicers to evaluate a homeowner’s eligibility for various alternatives. This includes loan modifications, repayment plans, and forbearance.
The process usually begins when the homeowner submits a loss mitigation application with detailed financial information. Once the application has been submitted, the lender must review it in good faith. During this review, foreclosure proceedings are suspended, offering homeowners time to seek relief.
The benefits of loan modification
Loan modification will be the best path forward for many Ohio homeowners. The benefits include:
- Preventing foreclosure – By making the loan more affordable, modification halts the foreclosure process.
- Protecting credit – While late payments can impact your credit score, a foreclosure can cause far more long-term damage.
- Stability – Keeping your home allows you to maintain your community ties without the disruption of being displaced.
Unfortunately, the process doesn’t always go smoothly. Servicers can deny applications for incomplete paperwork, misapplied payments, or missed deadlines. Some lenders will engage in “dual tracking”, meaning they move forward with the foreclosure while pretending to review a modification request. While this practice is restricted by federal law, it still happens.
This is precisely where having a skilled foreclosure defense attorney becomes invaluable. At Kohl & Cook, we help homeowners prepare complete applications, hold lenders accountable, and ensure servicers comply with both Ohio and federal regulations.
Contact a Columbus, OH, Foreclosure Defense Lawyer Today
If you’ve fallen behind on your mortgage payments, it’s important that you act quickly. The sooner you apply for loss mitigation, the more options you will have to protect your home. If you wait until the foreclosure process is too far along, it could limit your remedies.
Kohl & Cook Law Firm, LLC, works with Ohio families to navigate loan modifications, defend against wrongful foreclosure, and advocate for your right to stay in your home. Call our Columbus foreclosure defense lawyers today to schedule an appointment, and we can begin discussing your best options right away.
