What is a loan modification?
A Loan Modification is a permanent change in one or more of the terms of a Borrower’s loan. Often times, the payment amount is lowered to a payment the Borrower can afford by extending the loan, lowering the interest rate, and possibly a principal reduction. The Borrower may only receive one Loan Modification within a twenty four month period. At Weller Legal Group, an Attorney will guide you through the Loan Modification process and help you prepare and submit your paperwork.
Mortgage Modification is defined as a process wherein the Mortgage terms are changed or modified from their original terms, subject to the agreement of the borrower and the lender. Among the terms that can be altered by a mortgage modification include monthly payments, interest rates, and principal balances.
In a loan modification, the borrower may received a reduction in the interest rate being charged pursuant to the mortgage. The interest rate may further be changed from a variable to a fixed rate, and the method of calculating the interest can be changed. The lender may also agree to the reduction of late fees and penalties, to lengthening the term of the loan, or fixing the monthly payment to the borrower’s household income. The lender may agree to a forbearance.
Depending on the lender, the borrower may need to be either delinquent or current in order to receive a loan modification. Every lender seems to have different standards regarding the borrower’s ability to qualify for a loan modification. Please consult with Mr. Weller before embarking on such a pursuit. There are many pitfalls.