| | | | | he/she is holding. Conversely, a loan modification is |
| Loan modifications are becoming a big deal now that | | | | not the same as a refinance, a second mortgage, or |
| the subprime mortgage industry has caused a | | | | even a debt consolidation loan. The modification only |
| nationwide shakeup of the mortgage industry. Little | | | | affects the currently outstanding loan and does not |
| more than a change of an existing mortgage’s | | | | cancel it but just revises the terms. |
| terms without the need for a complete refinance, | | | | |
| bottom line information on loan mod shows that it is | | | | This method has the power to end foreclosure and |
| considered the best way for borrowers to work with | | | | rather than having to cure the default, the |
| an existing loan to avoid foreclosure and remain in | | | | homeowner may modify the terms of the |
| their home. | | | | agreement and reinstate the preexisting mortgage. |
| | | | | Since lenders need to see at least some profitability |
| The danger of foreclosure is one of the prerequisites | | | | from this business, there has been the stipulation that |
| for a lender to even consider a borrower’s | | | | accrued fees and penalties do not have to be |
| request to renegotiate the terms of their mortgage. | | | | forgiven but instead may be rolled into the actual loan |
| Borrowers must prove to the lender’s | | | | itself, thereby not being lost to the lender. In the |
| satisfaction that they are willing to remain in the | | | | same vein, the missed payments may be |
| home, unable to pay the mortgage due to a | | | | incorporated in a number of different ways to ensure |
| complete lack of assets that could be turned into | | | | that the lender is not shortchanged. |
| cash, and that there is a demonstrable likelihood that | | | | |
| the borrower would be able to continue paying on | | | | In return, the lender agrees to not blemish the credit |
| the mortgage if one or more terms of the loan were | | | | profile of the homeowner and in addition agrees to |
| adjusted. | | | | accept the declarations of the borrower with respect |
| | | | | to his ability to make future mortgage payments in |
| Borrowers must realize that this is not a short term | | | | good faith. Homeowners who have undergone this |
| fix, much like one month forbearances might be, but | | | | process will do well to remember that this is a one |
| instead it is a business decision that will have a far | | | | time chance and it is crucial to remember that this |
| reaching impact on the home owner that will span | | | | may very well be the final chance to save |
| the same amount of time as the duration of the loan | | | | homeownership for this consumer. |