©sheelamohan - freedigitalphotos

©sheelamohan – freedigitalphotos

Loan modification is the process where the terms of a mortgage are modified outside the original terms of the contract agreed to by the lender and borrower (i.e mortgagor and mortgagee). Many American homeowners today are behind on payments or facing foreclosure.  Banks more than ever are offering loan modifications to help restructure loans in default.  Many homeowners are not qualified or capable of keeping up with the payments as property values have fallen and adjustable-rate mortgages have increased payments.

Loan modification can be one option that can help a homeowner keep their property while providing time to rebuild credit if it has fallen, and also bring the loan up to current.  Typically between 3-6 missed payments can initiate foreclosure proceedings with most banks and mortgage companies.  Not everyone can qualify for refinance while involved in a loan modification.  It is most likely up to your primary lien holder or mortgage holder. If you are looking to consolidate your home equity loan into one payment you will need to apply for refinance. Depending on how long ago your loan was modified and what kind of credit you have, you may be able to refinance the property into one consolidated payment. You can contact your lender directly with borrower authorization and have someone walk you through your current options at your bank.

If the request for a loan modification is rejected, you may want to try it again in a couple months. Some lenders do not document the loan modification attempt you make. They are often motivated by changes in the housing market and their intent changes as more and more loans go into default. It does not hurt to try again. It is smart to work with a loan modification specialist, a seasoned loan officer or an attorney who specializes in real estate, mortgage lending and loan modifications. They understand how to speak to loss mitigation department, personnel and can get a general idea of the mood and trends of your lenders loss mitigation department.

Many homeowners do not learn the basics of the foreclosure process, instead trusting the first person who offers assistance. There are literally thousands of pages contained in books, magazines, and on the internet that describe what to expect when borrowers miss a mortgage payment. It would be wise for homeowners to take advantage of these cheap or free resources.

Usually, reading through a little bit of information about the foreclosure process and other lending laws, homeowners will have a good idea of what the process is, as well as possible legal or other defenses against losing the home.  Any option is more favorable than going through foreclosure and having it recorded against your credit score.  Loan modifications are becoming more attractive for not just homeowners but banks and lenders as well.  Because of the high rate of foreclosures that lenders are currently dealing with, more and more they are turning to alternative solutions to avoid the foreclosure process just as much as the average homeowner.


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