Understanding Loan Modification

Sep 14, 09 Understanding Loan Modification
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Modification is a process where the terms of a loan are adapted to new specifications that are outside of the original, agreed upon terms.  Terms that can be modified include interest rates, monthly payments, or the length of the loan.

When the housing bubble burst, home prices fell and many homeowners were devastated.  As unemployment rose and wages were cut, foreclosures and bankruptcies increased.  Some the homeowners were subprime borrowers, while many others were nominally solid borrowers that were being drowned under an unsustainable debt load.

Loan modification allows these homeowners to modify their loans in order to obtain better terms.

Most people seeking loan modification are approximately three to six months late on their mortgage payments.  However, the process of obtaining a loan modification is complex and navigating the process is complicated.

Many homeowners are simply not aware of their rights.  Most of them either submit to untenable demands, or continue to drown in debt until their homes are taken.  There is a concerted effort from the federal government and many local municipalities ravaged by foreclosures to make the public more aware of the loan modification option.

Because they can receive substantial savings on their loan terms, homeowners must provide detailed evidence that they need modified terms.  Those who have taken equity and have second or third mortgages have a good chance of having their terms changed.  Homeowners must demonstrate a need by providing budget information, original loan terms, and statements that attest to their financial hardship.

When monthly expenditures exceed monthly income, loan modification may be the only option that will stave off foreclosure.  Many homeowners are turning to reputable loan modification services.  Considering the dire circumstances, this is an instance where the consumer and service provider will mutually benefit.

Homeowners have to weigh all of their options.  However, rather than giving up on owning the home of your dreams and wrecking your credit, you should investigate the possibility of having your loan modified.

For more information and assistance visit this HUD sponsored website.

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4 Comments

  1. Loan modifications are tricky especially with some of that the big banks. If you are having trouble paying your mortgage, contact your lender and go to makinghomeaffordable.gov, it has plenty of information and information. I also suggest getting some expert help from a lawyer or a loan modification kit. I found a website http://www.homeloanmodificationfaq.com which helped me a lot. It recommended a great do it ourselves home loan modification kit, which not only saved me a bunch of money up front, it also saved my home from foreclosure.

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