Understanding Mortgage Modification

Mortgage modification is a technique that is used in order to help homeowners that are delinquent on their mortgage payments. Mortgage modification can be utilized in a number of different ways. Here are the basics of mortgage modification and how it works.

Mortgage Modification

Mortgage modification is when a lender agrees to a modification of an existing loan in order to help a distressed homeowner. For example, the lender might agree to lower the interest rate on the loan or get rid of late fees and past due payments. The purpose of this strategy is to keep the homeowner in their house and help them get out of financial trouble. It benefits the lender because they do not have to go into foreclosure and potentially lose a substantial amount of money on the property.

How the Process Works

Whenever a homeowner goes into default or gets behind on their payments, they can contact their lender to initiate this process. The lender will most likely have a set of documents that will need to be filled out. The homeowner will have to provide a hardship letter as well as important financial documents to the lender. It is then up to the lender to decide if they want to help the borrower or not.

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