Why Would a Lender Agree to Modify an Existing Home Loan?
Those unfamiliar with Mortgage Loan Modification often ask this question. The simple answer is: There has been an unprecedented rise in Home Foreclosures. That rise, coupled with a Sharp Drop in Property Values equals disaster for Mortgage Lenders. The last thing a lender wants on its books is another Foreclosure Sale that adds up to HUGE FINANCIAL LOSSES. Where appropriate and where the lender believes the borrower will be able to pay under the terms of a new Modification, it will agree to Modify. The lender has a choice: collect pennies on the dollar after an expensive and drawn out Foreclosure Sale, or keep the borrower in the home and making payments while the property values slowly rise. Admittedly, this is a bit of an oversimplification, but it basically explains why a lender would be motivated to Modify. Of course, those attempting to Modify a loan will need to make it abundantly clear to the lender that it is in the lender’s best interest to Modify.
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