Loan Modification:

Loan Modification Frequently Asked Questions

What are the benefits of a Loan Modification?

The most common benefit of loan modification to the homeowner is the prevention of foreclosure. A loan modification works to create a mortgage resolution that is financially sustainable for the homeowner.

Am I a good candidate for Loan Modification?

You may be a good candidate for loan modification if you want to retain ownership of your property, you have experienced a hardship, and you have a source of stable income. Check with your lender about specific loan modification requirements, and discuss your loan modification options with a loan modification lawyer.

What are some examples of circumstances that may be considered hardships by the lender?

Reduced income, death of spouse, borrower or co-borrower, incarceration, divorce, and serious illness are among the hardships that may qualify you a loan modification.
What happens during a Loan Modification?

During a loan modification, the terms of your mortgage are renegotiated to bring the interest rate down to a percentage that fits into your budget and the monthly payment no longer presents a severe strain on your ability to meet your other financial obligations. In this way, you can avoid foreclosure and remain in your home.

Is Loan Modification similar to debt consolidation or refinancing?

No. Debt consolidation seeks to lump a group of unsecured debts into either a loan or a program that offers lower payments. It does not apply to mortgages. Refinancing a home requires the borrower to apply for a new mortgage for the home and as such will require a down payment, an appraisal, and additional fees for the lender. Rather, a loan modification seeks to restructure an existing loan.

Why would my bank agree to a Loan Modification?

In many cases, the bank loses less money by lowering your interest rate and mortgage balance than taking your house back in foreclosure. Under these circumstances, a loan modification can be a win-win situation for both homeowners and lenders.

Does a Loan Modification affect my credit?

If you are successful in obtaining a loan modification, your loan will be reported as being paid as agreed. Assuming you make all of your payments on time, your credit score will not be hurt by a loan modification and may even be improved over time.

Why do I need a Loan Modification lawyer?

A loan modification lawyer can negotiate with the lender on your behalf and work to get you loan terms that you can afford. Loan modification attorneys use their specific legal knowledge and familiarity with loan modifications and mortgages in order to help clients reach their specific goals and attain financial stability following delinquent mortgage payments or threats of foreclosure. If you are facing the possibility of foreclosure, it is important that you act quickly and consult an experienced loan modification lawyer who can help you keep your home.