If you're consistently making payments and decide to modify your loan can the bank all of a sudden forclose your home if they don't think you can keep up with payments?
This is a complex question which would require a LOT more detail to even begin to answer. If your home is at risk of foreclosure, you may want to contact an attorney to discuss this issue. Many law firms offer free initial consultations.
A family member just told me the bank is forclosing their house after remodifying their loan. I don't know the details and I've never heard of anything like this which is why I was asking. I guess the homeowner's job status changed since the first loan and it seems that the bank sees it as a risk despite the faithful monthly mortgage payments. I just found out about this so I'll be getting more details as I go...... Thanks for the advice.
I'm no lawyer, but I don't see how any reputable bank has the right to foreclose on a house as long as the payments are being made in a timely manner. Now if your family member is trying to refinance his loan and his financial situation has changed for the worse since his original loan, then I can certainly see the bank not approving a new loan, but I simply can't see them doing a foreclosure if the loan is not in default. Unless they have some sort of unusual loan agreement, it just can't be done if the loan is current.
That does seem weird but nothing surprise me these days. Are you sure it's not that he was making the payments before the balloon payments kicked in and then started lagging behind his payments (can't pay the larger monthly bills). Tried to refinance but is unable to (also realized he's now upside down)? If it's really he's trying to refinance and they're foreclosing just because of that, it would seem weird. I would think he'd at least have to miss some payments.
Okay, it's starting to make sense. They just told me they defaulted for several months already.. I figure that would be enough for the banks to forclose. Thanks again for the advice/info everyone!
No. You've got federal protection. If you miss a payment date, you become in default on your loan. The lender can then hit you with late fees and surcharges. You also enter a 90 day window. If you are still not current when the 90 days are up, the bank can foreclose on your house. If you catch up on your payments, that 90 day clock gets reset. However, the bank cannot foreclose until those 90 days expire. The banks can loophole you here. If you are late month 1, get hit with late fees, pay the normal amount without paying the fees, you're still not current. Even if you continue to make your normal payments, 90 days later, the bank could foreclose. Of course, banks aren't always in a hurry to foreclose these days. Depending on the neighborhood, it might not be worth it for them to take ownership until vacant houses are sold or until they clear their own inventory in that area. To answer your question, there's no way in hell the bank can foreclose if they've been making their payments on time. My only concern here is the refinancing part of this. If they misstated information on their refinancing paperwork, the bank could back out of the agreement. However, they only have a certain period of time they could do that. And if they did back out, you would just revert to the original loan. Something smells fishy here. I would definitely say to contact a lawyer or get in touch with a non-profit that specializes in this. There is a lot of foreclosure help available these days.
