What is a “loan modification”?
A. Loan modification is one of the quickest, fairest, and most mutually effective way for homeowners and banks to prevent foreclosure. Banks use loan modification to reduce interest rates, loan balance and/or extend the term. By reducing the monthly payment, homeowners keep their house and resume paying a reduced monthly payment and the bank avoids taking back a house they cannot afford. Banks will make use of loan modification as one of the number one primary ways to keep them solvent.
A loan modification is a permanent change to one or more terms of your home mortgage loan, such as your interest rate, your principal balance, or how many years you have to repay your loan. The general goal of a loan modification is to make your mortgage more affordable, so you can keep up with your mortgage payments and your lender won’t foreclose on your home.
Loan Modification is an emerging option to foreclosure that benefits homeowners and lenders alike. Loan Modification consists of a variety of procedures set up by the government and lenders to assist homeowners threatened by foreclosure. It is a legal negotiation in which a loan’s terms, like the interest rate, the monthly payment or the term, are changed to reflect the current situation of the homeowner. This is not debt consolidation. And this is not an offer to refinance from a mortgage company. This is legal and done with the approval of the lender. The goal of loss mitigation is to help the homeowner to stay in their home, and protect their credit history. All requests are subject to your lender’s approval.
