What is foreclosure?
Foreclosure is a series of legal proceedings that are intiiated by a creditor to repossess property or a home after the borrower has become seriously delinquent on his/her payments. Once a credidor initiates the foreclosure process, the homeowner will receive a written notice of foreclosure and will have a limited time to take action to prevent the foreclosure.
What is Loan Modification?
A loan modification is a change in the terms of a home loan or mortgage. The change is implemented so that the person can afford to pay his or her mortgage and avoid foreclosure on his or her home. Loan modifications allow for the lender and the borrower to agree to new loan terms that are mutually beneficial. When a person obtains a loan modification his or her:
Mortgage interest rate may be reduced
Monthly payment may be lowered
Late fees may be eliminated
Mortgage repayment time span may increase
Why would someone file for a Loan Modification?
Most people file for a loan modification when they would like to reduce their monthly mortgage payment or know that their home is at risk for foreclosure. Instead of losing their home, people obtain a loan modification which would allow them to maintain ownership of their home at a monthly rate that they can afford.
Can a Loan modification prevent me from losing my home to foreclosure?
Loan modifications have been known to put a stop to foreclosure actions, although this does not happen 100% of the time. Obtaining a loan modification from you lender can be quite difficult, especially in situations where the lender feels they will lose money if the home loan is modified. If a lender thinks they will profit more from foreclosure, they will more often than not, deny a loan modification. A good attorney can help you take the legal actions necessary to seek a loan modification and helpfully avoid foreclosure.
How do I know if I qualify for a loan modification?
One of the very first things people wonder once they are ready to pursue a loan modification is if they are qualified. Not al people are eligible to pursue loan modification and the eligibility requirements are ever-changing. The US Treasury Department recently released a report listing the specific qualifications for loan modifications. Speak with your attorney to determine whether your circumstances qualify for a loan modification.