Stop House Repossession

The crash of the housing market has sent shock waves through the economy, encouraging the spread of loan modification. Modified terms can help prevent foreclosures and bankruptcy, while also proving to the advantage of lenders. It is a win-win situation for all parties involved and can greatly benefit the economy.

Under normal circumstances, a borrower makes periodic payments on a loan. A loan is comprised of principal and interest. Principal is the value of the loan itself. A $200,000 home loan starts off with $200,000 of principal owed. Interest is the fee charged, usually monthly or yearly, for the loan service. If $100 was still owed in principal and the interest rate was 10%, then $10 of interest would be owed for a total payment of $110. Until the loan is completely paid, the lender holds a lien over the property to ensure that they will receive their money back.

Modifications to loans take place when the borrower is no longer able to keep up with the required payments or when mandated by government or industry regulations and provisions. These renegotiated terms and conditions are usually beneficial to the borrower.

Loan modification usually offers reduced interest and better terms for other fees. Loans are also often extended, reducing the payments by increasing the amount of time the borrower has to repay the loan. Due to the painful economic circumstances, there are many programs that offer to adjust monthly mortgage payments based on the ability to pay.

The state of a loan does not impede the ability to apply for mortgage modification. Even if you have faulted on your loan or face foreclosure proceedings, you can still file an application for modification. However, even if you are up to date or ahead on your loan, you can still seek modification. Banks and finance companies are not obligated to offer modified terms, but it is often in their favor to do so. Borrowers with a good payment history are likely to refinance and pay off their original loan, depriving the bank of the loan profit. For poor payment histories, altered terms and lowered expenses make it more likely to be profitable than a costly and inconvenient foreclosing process.

While there are a few limited mandatory programs, lenders are free to offer modifications of existing loan agreements on a voluntary basis. Despite this, the federal and state government do offer a wide variety of tax breaks and other incentives for financial institutions to offer more opportunities for mortgage modification.

For help with home loan modification contact a qualified loan modification attorney that will look out for you and your family’s best interest such as Janian and Associates. You are welcome to reprint this article – but get your own unique content version here.