Loan Modification
A loan modification is a permanent change to a loan contract agreed to by both the lender and the borrower. The lender modifies an existing loan in an effort to help the homeowner in a time of documentable hardship. The ultimate goal is to make the loan affordable for the long term. Usually loan modifications come in the form of a rate reductions and fixing the interest rate for a certain period of time. Until recently, loan modifications were only given to borrowers when they were behind on payments had documentable hardships such as loss of employment, serious illness or death in the family.
Times have changed and now borrowers are able to get loan modifications from lenders because rate adjustments have made the loans unaffordable. Starting the loan modification process earlier rather than later helps borrowers obtain the most favorable terms.
If you can afford your home but you just can’t afford the terms of your mortgage then a loan modification may very well be perfect for you. An important question addressed in all loan modification submissions is the existence of a documentable hardship. Even if the hardship is temporary, the most important aspect of the hardship is that it must be provable.
These are actual examples of hardships that get modifications approved:
- Illness of the Borrower
- Illness of a Borrowers Family Member
- Curtailment of Income
- Loss of Job
- Abandonment of Property
- Property Problem
- Inability to Sell the Property
- Inability to Rent the Property
- Mortgage Servicing Problems
- Transfer of Ownership Delays
- Reduced Income
- Failed Business
- Job Relocation
- Death of the Borrower
- Death of Spouse or Co-Borrower
- Death in the Family
- Incarceration
- Divorce
- Marital Separation
- Military Duty
- Medical Bills
- Damage to Property (natural disaster or unnatural)
