Loan Modification
A
loan modification is when the lender modifies your current mortgage
in order to work with you because of a hardship. The purpose is to
help make your loan more affordable. Usually it is in the form
of a rate reduction and fixing the rate for a certain amount of
time.
In the past this was only used when a borrower was
delinquent and suffered a hardship such as a job loss, divorce,
illness etc.
Now, borrowers can obtain mortgage
help from their lender for un-affordable rate
adjustments on adjustable rate mortgages.
The earlier you get
started, the better your chances are of negotiating a fixed rate and
a payment that you can manage.
If you can afford
your home and not just your loan, then you may be eligible for a loan
modification.
Solving foreclosures is what companies want to do these days, too, according to lending experts. Fannie Mae, Freddie Mac and the mortgage servicers responsible for administering borrower loans have all attempted to boost loan "workouts" or "cures" and reduce the number of homes that end up in the dreaded "REO," or "Real Estate Owned," category.
"Servicers should be solicitous at every step of the process to try to help the borrower stay in the home," says Danny Smith, manager of loss mitigation at Fannie Mae. "The sooner that there is a connection there between the two of them to work something out on the loan, the more likely the borrower is to stay in the home."
Mortgage banks and investors aren't just doing this out of the kindness of their hearts. Workouts look better from a public relations standpoint and usually cost thousands of dollars less than full foreclosures and home repossessions. They also keep lenders from having to slog through the foreclosure process, which in some states can drag on for a year and a half or more. Regardless of lenders' motivations, the trend toward increased workouts means borrowers have a much better chance today of avoiding eviction than in the past.
Contact your lender to see if this option will work for you!
Information on this website is not intended to be Legal Advice.
Please consult with a Licensed Attorney and CPA prior to making significant decisions.
