The loan modification process can be made simple with the proper assistance of a Nationally Certified Foreclosure Prevention & Default Counselor. Before you seek help for a loan modification, you first should understand what it is.
Also known as a mortgage modification, a loan modification is a process that allows home owner’s to modify their mortgages by lowering the interest rate or reducing the principal balance. In doing this, home owners can avoid foreclosure, which is the worst scenario for the owner, the bank and the community alike.
Many of the problems that lead to home loan modification necessities have nothing to do with the home owners decisions. Due to the dropping of property values in these difficult economic times, families have started seeing their their primary investments worth drop. This fact coupled with adjustable rate mortgages (ARM) that have spiraled out-of-control and monthly mortgage payments are tough to pay for many due to the unemployment rate, many are left searching for solutions in hopes to avoid foreclosure.
By lowering your monthly mortgage payment and converting ARM loans to a fixed rate loan, foreclosure can be prevented.
In that spirit the U.S. Department of Treasury has started a Home Affordable Modification Program. The purpose is to allow at-risk borrowers to reduce their monthly mortgage payments in an attempt to prevent foreclosure. Essentially, it is a $75 billion loan modification program that allows responsible homeowners to refinance to interest rates as low as 2 percent.
It is important in this process to seek professionals that can be trusted. Predatory lending was a big factor in irresponsible lending practices, particularly with subprime lending. In the same light, avoid loan modification scams looking to take advantage of those who are seeking assistance by going with a Nationally Certified Foreclosure Prevention & Default Counselor.
This time around, do it right and in a way that will set you and your family towards a better path.