What Is Loan Modification?
Due to the duration of the current state of the economy most of you probably know what a loan modification is, have a general idea of how it works, or at the very least have heard the term “loan modification” thrown around from time to time. Just in case you have been dozing, or have no interest or aptitude for the world of loss mitigation nor the mechanics of finance, I have created this post to explain the very basics of loan modification.
First of all loan modification will also be refered to as mortgage modification, a restructured mortgage loan, or in different contexts such as “ask your lender to modify” , and of course among the industry insiders refer to it as a “loan mod” or a “modification”
One half way important aspect of a loan modification that I want to make clear is that a loan modification is not a term that was thought up for the mortgage industry it is in fact a legal term that can refer to any sort of contract adjustment whether a loan for a car or whatever. Though today in this current foreclosure crisis and time of financial hardship the term loan modification is primarily known as a mortgage industry loss mitigation solution. Thus this post will refer to it in that context.
The modification or adjustment to the terms of a mortgage agreement that is granted by the lender in the efforts minimize losses of a non-performing mortgage asset (a practice commonly refered to as loss mitigation).
A restructured mortgage agreement may allow a homeowner to make home affordable by lowering the monthly mortgage payment to a sustainable level.
Mortgage modification is a loss mitigation tool that can be used as an alternative to foreclosure and a solution to a troubled mortgage.
Loan Modification Will Stop Foreclosure
Loan Modification Programs
For the first time there is effective homeowner debt help such as a loan modification program that the government provides as mortgage assistance. The Making Home Affordable Programs also known as HAMP and HARP are wonderful outlets for Homeowners to obtain a loan modification or other mortgage solution that allows them to stop foreclosure and get on the track to financial recovery. These programs stream lined and efficient. They are paid for by the tax payer so there is no direct cost to the Homeowner.