Loan Modification is becoming a much more familiar term to many with mortgages in distress

An often asked question is: What Is Loan Modification?
A loan modification is the process of working out a permanent solution between you and your lender that eliminates or meaningfully reduces current debt you have incurred from a mortgage ‘gone bad”. It involves a loan payment plan that’s changed due to the hardship of the borrower.
How Loan Modification Works?
A loan modification to an existing loan made by a lender for a borrower whose’s long-term inability to repay the loan can be substantiated. Loan Modification often involves a reduction in the principal balance, interest rate or an extension of the term of the loan. This is true of the Obama Loan Modification Program. A loan provider is open to modifying a loan because the cost of doing so is less than the cost of default or foreclosure.

A loan modification agreement and a forbearance agreement aren’t the same. A forbearance agreement provides short-term relief for mortgage holders who have temporary problems, while a loan modification agreement is a long-term solution for borrowers who aren’t able to repay an existing loan. The new Federal Loan Modification programs make this easier.

Loan modification is a term very unfamiliar to homeowners but not for very long, particularly now that the Obama Loan Modification plans are all over the news. What most people are coming to realize is that losing their house to foreclosure is becoming real. Home foreclosure in America today is at an all time high and is affecting many homeowners that never believed they could lose their home. Homeowners are feeling the double whammy of high interest rates and a slow economy. A loan modification may be the only way out for a homeowner to save their home. Negotiating with the bank for a loan modification can be an exhausting process for many homeowners. That is why retaining the services of an experienced law firm or real estate attorney rather trying on your own often leads to a much higher success rate.

Today’s market is one of steep changes in real estate values nationwide together with tighter credit requirements. The combination makes a touch challenge for someone facing an upcoming adjustment in their payments due to an adjustable rate mortgage (ARM). It’s not a good idea to take on your lender by yourself. They want you to do this. They are better at this than you are. An Attorney will represent you in achieving workable terms that make sense in today’s economy. They will fight to save your home and work out payments you can afford. No matter what the reason, millions of people are in the same situation.

Most people react by trying to refinance their high interest rate mortgage. During normal times this would be a good choice, although it’s always expensive to pay the fees that go with refinance. In today’s market this doesn’t work. An attorney will work to alter the terms of your mortgage to fit a workable solution.