“What do I do when I’ve defaulted on my mortgage?”
The right to cure, is a right that every person who holds a mortgage has in Massachusetts. If you have defaulted on your mortgage, are not keeping current on mortgage payments, you must be provided with notice of this fact stating that you are in default. Once notice is given, you have a 90 day time period in which to cure this default on your mortgage.
“What options do I have during the “right to cure” period?”
The borrower on a mortgage has the “right” to either catch up on all late or missing payments, to cure that is, or can try to apply for a loan modification.
Mortgage Modification in Massachusetts
When loan modification is an option, you may have the opportunity to change the terms on the mortgage to terms that are better for you based on your current circumstances. Terms that might be subject to change are a lower interest rate, or in your present mortgage payment by extending the amount owed over a longer period of time.
“Could a Loan Modification be my Way Out?”
When tragedy strikes, or financial circumstances radically change, you might want to consider modifying your current mortgage to provide necessary financial relief. Remember, however, that there is always another side to every story. The most important thing to realize is that the lender or bank is going to present terms that favor itself. Make sure you evaluate the terms that are presented to you, that your interest rate is favorable, etc.
“What Should I do During the 90-Day Right to Cure Period?”
Be aware that the bank or lender must provide you with an accounting of what is owed to you on the mortgage, a detailed accounting that should show the amount owed, any costs, fees, penalties that have been applied to the total. If the bank or lender has placed funds in escrow, that information should also be available to you. Similarly, real estate taxes or insurance funds set aside should be clearly indicated in the accounting provided by the lender or bank.
Why is such an accounting important? Without an accounting, it is impossible to know if there have been errors or worse, unfairly applied charges to the account. You, as a mortgage holder, have a right to receive such an accounting. Also be aware that an accounting that is flawed or contains unfair charges and penalties is evidence that might be useful in achieving superior bargaining position.
Getting Ready for a Loan Modification
When you meet with your bank or lender, prepare your documentation: proof of your home ownership, your income and any debt that might affect the mortgage. Preparation sends a signal to the bank or lender that you are ready to deal professionally with your responsibilities as a mortgagor.
Loan Modification Requires Negotiating Skills
Keep in mind that the bank or lender is in the superior bargaining position, that is, they can make or break the deal and generally speaking have complete control over the terms of any modification. Still, in some circumstances you may be able to negotiate a better deal on your mortgage. One way to successfully achieve a modification of your mortgage is to assist the lender in reaching the realization that you take your responsibilities seriously, that you appreciate their financial interest in the mortgage, and that you are prepared to succeed in meeting your obligations to the bank or lender.
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