What to Know About Loan Modification in New York

large home driveway

Few things are more stressful than facing foreclosure. Luckily, you may be eligible for a loan modification. Read on to learn more about loan modifications in New York.

What is a Loan Modification?

Loan modifications are available to debtors when they are struggling with their mortgage payments. This allows debtors to adjust their loans so that the payments can better suit their financial needs. In New York, there are two types of loan modification programs:

  • Bank-Run: This program may lower a debtor’s interest rate, fix an adjustable rate, or not require them to pay excess principal
  • Government-Run: This program allows a debtor to lengthen their loan to a 40-year plan that lowers the cost of their monthly payments and drops the interest rate of the loan to 2% for a 5 year period

Am I Eligible for a Loan Modification?

It is important to know that not everyone will be eligible for a loan modification. In order to determine your eligibility, the bank will reexamine your finances. Some of the documentation you will need to apply for a modification can include the following:

  • Your personal or business tax records
  • Various financial statements
  • Profit and loss statements
  • Paystubs from all wage earners in your household
  • A current utility bill that can verify you are living in your home
  • A hardship letter that explains why you are not capable of paying your mortgage at the present. It is important that you do not write this letter without the help of an attorney.

What Happens if I Recieve a Loan Modification?

When you receive a government loan modification, your interest rate will be lowered to 2%, and your loan term will be extended to 40 years. This will result in lower monthly payments. On the other hand, an internal banking program may lower your interest rate, fix an adjustable rate, forgive excess principal, or place your defaulted payments at the end of your loan. This means that you may not have to pay these debts until you either refinance or sell your home.

If you are facing foreclosure, you may need to apply for a loan modification. There is no time to waste, reach out to our firm today to speak with an experienced and dedicated bankruptcy attorney.


Michael D. Pinsky, P.C. represents clients in bankruptcy actions and related matters. Please call 845-394-2616 or contact the firm online to schedule a consultation.

Read Our Recent Blog
View More