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Posts Tagged ‘Loan Modification’

What is Loan Modification?

Loan modification is one of most popular option for homeowners to prevent foreclosure. With loan modification, if you can’t afford your current mortgage, it may be possible to change certain terms of the loan to make it more affordable.

Example of a Loan Modification

For example, a loan modification can change the interest rate on your home loan or the time allowed for repayment of the loan. By modifying the terms of the loan, you can usually lower your monthly mortgage payments to an amount that works for you. Therefore, you will not miss your mortgage payments and will not be in foreclosure. If you are already behind on your mortgage payments, loan modification can help you catch up and therefore avoid being foreclosed on.

Loan Modification Programs

There are multiple loan modification programs available, including the federal government’s Home Affordable Modification Program. These loan modification programs offer different options for borrowers in different situations, but all are meant to help people keep their homes when facing a significant hardship. Banks and mortgage companies usually will work with homeowners to determine whether a loan modification or another solution may work for them.

Loan Modification Help

You can also get help from a loan modification expert below.

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There are many ways to prevent foreclosure and loan modification is one way that has helped many homeowners. If you have a mortgage problem and  you are wondering if a home loan modification is the right option for you, then you can get a free, no obligation consultation to find out what exactly a loan modification is, how it can help you and if it is something that is right for your situation.

What is Loan Modification?

Loan modification allows homeowners and lenders to change the terms of a loan in order to help the borrower stay in the home and avoid foreclosure. It is important to note that a loan modification is not a new mortgage. A loan modification is the renegotiation of an existing loan.

With a loan modification, it's possible that a homeowner's:

• interest rate may be decreased
• interest rate may be changed from an adjustable to a fixed rate
• time the borrower has to pay the loan back can be lengthened
• loan principal may be decreased
• late fees may be waived
• second mortgage could be waived or wiped off of the books

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Can loan modification prevent foreclosure

When facing foreclosure, most people wonder if mortgage companies will work with you to prevent foreclosure. The simple answer is yes. However, the extent of how the mortgage company will work with you depends on the individual mortgage company. Although mortgage companies would rather work with you to prevent foreclosure, in practice, it is quite difficult to come to an agreement with mortgage companies.

Why is it difficult to work with mortgage companies to prevent foreclosure?

While all mortgage companies will say that they would work with you and help you however they can, in practice, they are there to gauge how much you can pay, negotiate higher payments than you can afford and send the rest to collection even without notifying you. Most mortgage companies have many departments dealing with people who are behind in payments. It is not uncommon for the person on the phone with you to say one thing and then you receive something else in the mail.

It is hard to talk to the person with authority at the mortgage company. Almost all mortgage companies will treat you as just another case they have to deal with and their objectives are to get as much out of you as possible and as fast as possible. If you are prepared to pay some parts of your mortgage payments, then they are likely to take it but then you are also likely to get a letter from their collection agencies.

How to work with mortgage companies to prevent foreclosure?

Before you contact your mortgage company and try to negotiate, you should find out about all your options. You can get a free foreclosure consultation or you can do a lot of research by yourself.

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Then you can prepare your hardship case that will include sending the mortgage company a hardship letter or several hardship letters to explain your situation. If you have talked to your mortgage company and have settled on a solution, you should get them to put your agreements in writing. Don't
trust that things will go as planned until you see everything in writing.