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Tina, Lawyer
Category: Real Estate Law
Satisfied Customers: 5436
Experience:  17 years of legal experience including real estate law.
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I have a pending loan modification. I have been sending in a

Customer Question

I have a pending loan modification. I have been sending in a payment monthly, then this month my lender rejected my payment. Which places us over 90 days delinquent. We are in Texas and now they wont accept any amount unless it is the full amount of default. Is this legal?
JA: Has any paperwork been filed?
Customer: yes, the loan modification is in underwriting
JA: Anything else you want the lawyer to know before I connect you?
Customer: They advised today that they can refer it to an attorney at any time. We sent two payments both of which were rejected (less than 5 days apart) and no one advised us.
Submitted: 1 month ago.
Category: Real Estate Law
Expert:  RealEstateAnswer replied 1 month ago.

Hi! I will be the professional that will be helping you today. I look forward to providing you with information to help with your question and concern

Expert:  RealEstateAnswer replied 1 month ago.

Good morning. I am sorry to hear about this. Can you share with me why they rejected the payment? Were all previous payments timely? Did they tell you why it was rejected?

Customer: replied 1 month ago.
We have been working with them since July on a loan mod. We started falling behind due to some unforseen circumstances and damage to our home that had to be repaired. They have never rejected a payment before. They said it was because thw amount was not equivalent to two montha payments, however the loan was under 90 daya delinquent and theu previously told us that as long as the loan did not go over 90 daya they would still accept payment. They rejected two payments one that our banl automatically sent and they rejected on the 29th but did not inform us until yesterday, and the other on the 31st that they told us to send via money gram and still rejectes it. Now we are over 90 days delinquent and they are threatening foreclosure. I asked them would the loan mod process stop the foreclosure process due to dual tracking and was advised that they can refer it to an attorney at any time.
Expert:  RealEstateAnswer replied 1 month ago.

Thank you for the reply. If a home owner fails to pay under the terms and conditions of a trial loan modification, the bank can proceed and foreclose. The trial modification is used to show the bank that the homeowner can pay if the loan is modified, so the homeowner can keep their home but if they fail to pay or fall behind, the bank can proceed. If you are able to pay in full, it may stop this but if you are behind and were unable to bring the loan current, they can refer it to an attorney. You may want to see if they will agree to two payments to bring it current but the trial modification can not continue to fall behind or else it results in a default and foreclosure.

Customer: replied 1 month ago.
They have not approved a mod yet or given us a trial mod. It is still in underwriting. We were just sending in payments until it was either approved or denied.
Expert:  RealEstateAnswer replied 1 month ago.

If the payments are not the full amount, the bank can reject them. Moreover, any payments received, can be applied to what is owed but the loan continues to be in default every month, until it is paid, which triggers the 90 days, which start foreclosure proceedings.

Customer: replied 1 month ago.
We were sending in the full monthly amount. Also is it legal for them to actively be working a foreclosure while working a loan mod?
Expert:  RealEstateAnswer replied 1 month ago.

The goal is a modification is home retention. The bank wants to try and keep the homeowner in their house. While the home owner is paying under the modification, foreclosure actions should be halted. They can be picked up if the borrower defaults but when there is a modification, it would be in bad faith to keep going with the foreclosure.