A loan modification is simply an agreement between a homeowner and a lender to renegotiate the original terms of the mortgage loan.
Generally structured as a long-term solution for a borrower whom is unable to continue making their mortgage payments on a personal, investment or commercial property, a loan modification can include the following.
- Reduction in interest rates
- Principle reduction
- Longer loan term
- Payment holidays
- Changing an adjustable rate to a fixed-rate mortgage
- Elimination of late fees and penalties
- Elimination of past due balances
- Stopping foreclosure proceedings
With the rapid decrease in property values, loss of jobs and other factors which have resulted in 1 in 8 home owners being behind on their payments, many mortgage lenders and servicers are taking into consideration the option to modify loans vs following through with a foreclosure.
Keeping in mind that a lender / servicer has a fiduciary responsibility to protect their investors’ best interests when negotiating new loan payment terms through a mortgage modification, a successful loan workout may involve a Net Present Value test, borrower hardship letter, and a properly submitted request package.
However, one of the key components in a Loan Modification is that a borrower has to demonstrate that they will be able to make their mortgage payments on time going forward if the terms of the mortgage loan are changed.
With the Treasury Department has reporting that some some lenders are receiving upwards of 8,000 to 10,000 calls a day, communication obviously becomes one of the main challenges for homeowners in need of fast results and clear instructions.
Loan Modification Process
Related Articles
- Do I Qualify For The Obama Making Home Affordable Modification?
- How Much Will My Payment Decrease With A Loan Modification?
- Will A Loan Modification Affect My Credit?
- Getting Approved For A Loan Modification – It’s All In The Packaging
- Required Documents For A Loan Modification
- Writing A Loan Modification Hardship Letter
With No Up-Front Fees, our clients only pay for Results.
Call us today if you have questions about packaging and
submitting a Loan Modification request.
877-496-5393
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