If you’re trying to defend yourself against a foreclosure, one think you may want to look into is a loan modification. A loan modification varies from lender to lender, so it’s important to have an attorney on your side who is familiar with the process your lender uses.
Using a loan modification can help you refinance your mortgage at a rate that you can afford. Refinancing completely replaces your loan, so you have a new mortgage. It may have a lower interest rate and lower monthly payments.
Who decides on the terms of a loan modification?
The terms of a loan modification are determined by the lender. However, your attorney can take part in the negotiations and work with the lender to come up with a solution that works for you. Some options may include:
- Changing from an adjustable-rate mortgage to a fixed-rate loan
- Extending the length of your loan term
- Lowering your interest rate to create a more affordable payment
Why would lenders modify a loan rather than pursuing foreclosure?
Lenders will often allow a modification of loans instead of pursuing a foreclosure, because the foreclosure process is costly for lenders. Foreclosures take time and require court involvement, but a loan modification can be done in house. That means that the company will be more likely to save money. In the long-term, they’ll get more money by making your payments affordable rather than relying on the sale of a foreclosed property, too.
If you need a loan modification and representation, your attorney can help. Our website has more information for you, so you can learn about this option.