What is Loan Modification?

We hear the phrase more and more often: loan modification. What exactly is loan modification?

A loan modification is a permanent change in one or more of the terms of your loan creating a brand new contract between you and your lender. We will work with the lender to create a new contract that will reinstate your loan and give you a fresh start by restoring your credit status.

A loan modification agreement is different from a forbearance agreement. A forbearance agreement provides short-term relief for borrowers who have temporary financial problems, while a loan modification agreement is a long-term solution for borrowers who will never be able to repay an existing loan.

Should You Get Your Mortgage Modified?

If you can’t afford your current monthly payments and at risk of losing your home to foreclosure, you should think about loan modification (refinancing is another viable option).

My Perspective

In my opinion, if you are struggling to make your monthly mortgage payments or if you think you are stuck with a bad loan, it’s worth doing more research and see if you can get your loan modified. However, be wary of any company that guarantees to help modify your loan and promises more affordable payment. There are too many scammers out there looking for a few quick bucks.

Published December 20th, 2009

Tags: Loan, Modification

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