What is a Loan Modification and How Can it Help You Save Your Home?
Posted by: real estate / Category: ForeclosuresLoan modifications are becoming a big deal now that the subprime mortgage industry has caused a nationwide shakeup of the mortgage industry. Little more than a change of an existing mortgage’s terms without the need for a complete refinance, bottom line information on loan mod shows that it is considered the best way for borrowers to work with an existing loan to avoid foreclosure and remain in their home.
The danger of foreclosure is one of the prerequisites for a lender to even consider a borrower’s request to renegotiate the terms of their mortgage. Borrowers must prove to the lender’s satisfaction that they are willing to remain in the home, unable to pay the mortgage due to a complete lack of assets that could be turned into cash, and that there is a demonstrable likelihood that the borrower would be able to continue paying on the mortgage if one or more terms of the loan were adjusted.
Borrowers must realize that this is not a short term fix, much like one month forbearances might be, but instead it is a business decision that will have a far reaching impact on the home owner that will span the same amount of time as the duration of the loan he/she is holding. Conversely, a loan modification is not the same as a refinance, a second mortgage, or even a debt consolidation loan. The modification only affects the currently outstanding loan and does not cancel it but just revises the terms.
This method has the power to end foreclosure and rather than having to cure the default, the homeowner may modify the terms of the agreement and reinstate the preexisting mortgage. Since lenders need to see at least some profitability from this business, there has been the stipulation that accrued fees and penalties do not have to be forgiven but instead may be rolled into the actual loan itself, thereby not being lost to the lender. In the same vein, the missed payments may be incorporated in a number of different ways to ensure that the lender is not shortchanged.
In return, the lender agrees to not blemish the credit profile of the homeowner and in addition agrees to accept the declarations of the borrower with respect to his ability to make future mortgage payments in good faith. Homeowners who have undergone this process will do well to remember that this is a one time chance and it is crucial to remember that this may very well be the final chance to save homeownership for this consumer. You can find out more about mortgage loan modification by visiting our site loan-modification411.com
Krista_Scruggs
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Tags: Foreclosure, mortgage, mortgage loan