Terry White CPA
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Loan Modifications
What is a Loan Modification?
A home loan is a contract. Under the terms of this contract, a lender, such as a bank, loans money to a home owner. The home of the borrower is security for the loan. If the borrower does not repay the loan as agreed, the lender takes the home of the borrower and sells it.
In some cases, the lender will change the terms of the home loan contract. A home loan with changed terms often called a loan modification. Loan modifications can take several forms.
In some cases, the monthly payment is lowered and the number of months of payments on the loan are increased.
In some cases, the interest rate on the loan is reduced.
In some cases the principal, or balance of the loan is reduced.
In some cases, a loan modification involves all of the above.
The type of loan modification that can be obtained depends on many factors.
Among these factors is whether or not the borrower has a steady stream of income.
How many years has the borrower worked at his job.
The trade or profession of the borrower.
How many years has the borrower lived in his home.
How much debt other than the home loan does the borrower have.
How much borrowing power does the borrower currently have.
What is the value of the borrowers assets, other than the home.
Is the mortgage on the residence greater than the market value of the home.
What circumstances caused the borrower to need a loan modification.
If a home is in foreclosure, is it to the advantage of the lender to make a loan modification, or to take the house?
Sometimes an application to modify a loan can prevent a foreclosure.
What Can I do for You?
If a loan modification seems to be a good choice for you, I can put you in contact with a financial services company that will attempt to negotiate a loan modification for you. This company will not attempt to negotiate a loan modification if you clearly do not qualify for one.
