What Is A "Loan Modification"?

This term has been getting a lot of attention lately and rightfully so. With millions of homeowners stuck in toxic adjustable rate mortgages and no way to refinance out of them, loan modifications may be the only way to assist struggling borrowers. In the past this was only used when a borrower was delinquent but now we see it being used before someone is delinquent. This will be the hottest term and the best way to help people avoid foreclosure.

 

What happens with a "Loan Modifcation"?

 

A Loan Modification will change the existing mortgage note and give the client a fresh new start in managing their home. Accounts will be brought up to date immediately.

 

With a loan "modification" you take the mortgage you now have and change the interest rate and payment requirements. A change in rates and payments does not result in the need for a new closing, legal fees, survey, appraisal, or taxes. In contrast, if you "refinance" a loan you'll be required to have a closing and forced to pay a variety of fees and taxes. With a modification you do not have these fees.

 

Lenders are willing to negotiate when borrowers are facing financial difficulties and can't obtain other financing alternatives. Home Loans and Finance shows the lender why it would be in the lender's best interest to agree to a workout arrangement. In turn, the lender will reduce the loan interest rate, reduce monthly payment amounts or change other loan terms to allow for an affordable loan to allow the homeowners to avoid foreclosure.

 

What is Home Loans and Finance's function in this process?

 

Home Loans and Finance brings the two parties together to mutually agree to a workout that creates new and better loan terms which are affordable and realistic. The hope is that the new loan will enable to the borrower to meet their obligations. And with Home Loans and Finance's detailed personalized financial analysis, this hope becomes a reality. Our clients accept the loan that is affordable to them, and never need worry about foreclosure again.

 

Can't I do this myself? Why should I pay someone else to do it for me?

 

Of course you can negotiate with your mortgage company yourself. Just as some people act as their own accountants or legal representation, some people are knowledgeable enough about mortgage delinquency that they are comfortable negotiating with their mortgage company.

 

However, for others phrases like "partial claim", "loan modification" and "special forbearance" are intimidating and confusing terms. People in this category may find dealing with their mortgage company to be a dehumanizing experience as they are shuffled along the assembly line-like process, never sure if the representative they are talking to is truly looking out for their best interests or merely trying to meet their quotas while attempting to keep their talk time low. For best results it always advised to hire a professional.

 

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