Loan Modification

What is Loan Modification?

A loan modification is the procedure whereby a homeowner’s current loan payment plan is changed, due to the hardship of the borrower. This may include changes to the interest rate, the term of the loan, principal amount or the monthly payment amounts so that a homeowner can afford the new payment and save their house from foreclosure. Now, in California, refinancing programs are hard to get because the value has gone down in this declining market and most of the homeowner have no equity at all to qualify for the refinancing.

Why Would a Lender Agree to Modify Your Loan?

It’s simple. Foreclosures are at an all time high in the US history and especially in California. Banks are in the business of lending money, not owning property. When the bank forecloses the property, their loss is much bigger than this kind of workout with the homeowner.

The loan modification option saves the homeowner’s home from foreclosure, helping both the homeowner and the bank.