Loan Modification

Loan Modification
A loan modification is a permanent change in one or more of the original loan terms on a homeowners original loan, which allows reinstatement of the loan and prevents foreclosure. As a foreclosure prevention alternative, a lender may consider modifications which:

• Capitalize delinquent interest, escrow, fees, and costs (based on permission on P&S Agreement)
• Implement a step rate mortgage
• Extend the term of a mortgage
• Reduce and modify the interest rate
• Or any combination of the above considerations.

What a loan modification does:

• Instantly removes a loan from foreclosure
• brings a loan current (we are able to negotiate in some instances with $0.00 out of pocket)
• Adjusts the term and rate of the mortgage

Different Types of Loan Modifications:

• Straight Capitalization Modification – This modification adds delinquent interest to the principal balance and the loan is re-amortized over the existing interest rate and term
• Term Extension – This modification extends the term (number of months). The rate stays the same and the re-amortization is done same as straight cap listed above. The term can not exceed your original mortgage term (if you started with a 30 year mortgage the term can not extend past the 30 years from modified date)
• Step Rate Modification – This modification also adds the delinquent interest to the principal balance but the interest rate is temporarily reduced to allow a homeowner the opportunity to afford the payment. The typical step rate modification would drop 1% for every year and they typically do not last longer than 3 years.
• Interest Rate Modification – This modification adds delinquent interest to the principal balance and the loan and the loan is re-amortized at a reduced interest rate.
• A combination of any of the above

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Saturday, March 8th, 2008, by Foreclosure Help and is filed under "Foreclosure Options, loan mod, loan modification, loan modification help, loss mitigation training, modify my loan ". You can leave a response here, or send a Trackback from your own site.