The recent rise in Loan Modification Foreclosure (i.e., foreclosures based upon a default after the loan has been modified) is creating a swell in foreclosure cases throughout Florida
As loan modification foreclosure rates increase, a number of home owners throughout Florida will be wondering what they can do. Most often, these modifications came at a time when you needed it the most. These are entirely different agreements and are subject to a wholly different group of defenses.
Generally, a modified loan is one that has already been in default once. It could have been modified during an active foreclosure case and often times, there are certain things that you agreed to. For example, the loan modification may have stated that you recognize an amount due and owing to the bank that is giving you the modification. You may have admitted to the allegations that were made in the underlying foreclosure case. It may state that you gave the bank all of your income. It could have required you to sign that all the information you provided was true and correct. Generally, this modification by the bank will create a new payment and a new interest rate.
Defenses to Loan Modification Foreclosures
Just like there are defenses to Foreclosure on a traditional Note and Mortgage, there are defenses under a modification. For example, a number of these modifications were based solely on income and did not take into consideration the total liabilities of the borrower. Additionally, the same terms of the Note and Mortgage will apply unless they were expressly modified by the modification. This means you may have to have been sent a new paragraph 22 letter or the bank would have had to complete other conditions precedent prior to bringing the foreclosure action. A modification also can change the principal balance of the loan, which brings about its own issues to the enforcement of the note and mortgage.
Can you modify again if you have defaulted on a loan modification
Unfortunately, it depends. I’ve seen some modifications in years past that were modified even after there was a default on an original modification. But many programs that the banks used prior to the loan modification are not available anymore. This can make it very difficult to keep your home if no options are available.