Loan Modification - Avoiding Foreclosure

Loan Modifications - A New Wave

What is a Loan Modification? Well, it is where the existing bank or lender will change the terms of the current loan that a borrower has. They may change the principal balance owed to them. Or, they may change the interest rate charged to the borrower. They may even do both. And, they may change the type of loan it is. Example - You may have an interest only adjustable rate mortgage. The lender may opt to change the loan to a low fixed rate mortgage.

Are banks really doing Loan Modifications? Yes. Banks are leaning toward doing loan modifications over taking back a property through foreclosure.

Why? Well, banks are not in the business of selling inventory homes. And, I believe that banks will only receive funding from the government bailout if they are doing loan modifications.

I have become associated with a company doing loan modifications. They have an on-staff attorney negotiating on behalf of the borrower. And, the fee that is charged up front to do the loan modification is fully refundable if they cannot negotiate a loan modification. And, they guarantee at least a 10% reduction in current mortgage payment. However, in most cases, they are getting around a 40% reduction in the monthly mortgage payment. So, for a borrower that has a $1500 a month payment, that could go down to $900 a month. This is what is normal for these modifications with this company. I have also heard of instances of a 2nd mortgage being reduced from $100,000 to $8,000 principal balance/payoff. This program does not work for everyone. However, if the borrower truly needs a loan modification, it usually works.

This is a new wave or trend that is happening now.

This is helping families avoid foreclosure and allowing them to stay in their homes with an affordable payment.

Call me at (480)215-2525 if you think you know of someone that might benefit from this.