A loan modification may be right for you if you are experiencing a hardship or facing foreclosure. A foreclosure can be postponed while working with your lender to find a loan modification solution, once approved your loan is brought current and the foreclosure is halted. Something you should know is there are 4 main types of loan modifications, when discussing a loan modification with the lender it is important you understand the differences and which modification can give you the greatest benefit and how it will affect you in the short and long run. First you have what is called the Straight Capitalization Loan Modification; this modification is where delinquent interest is added to your principal balance and is amortized over the existing term and interest rate. This will cause an increase in the homeowner’s monthly mortgage payments. The straight Capitalization Loan Modification is not a good option for the homeowner that is facing a long term hardship and is struggling to make their monthly payments. In my opinion this is the worst modification available. The homeowner would have to qualify for this modification proving they would be able to afford the increase in payments. Second is the Loan Modification with Term Extension; this modification extends the loan terms (the length of the loan). In most cases the delinquent interest is added to your principal balance, the term of the loan is extended a certain amount of months or years thereby reducing your monthly payments and making them more affordable. For example, a homeowner that had a thirty year mortgage and 25 years remaining could extend the term to 40 or more years. There can be many benefits to this type of modification; it can help you achieve the lowest monthly payment, lower payments may protect you in the event of future financial crises. If you become stable and are in the position you can always pay extra towards the principle to lower the balance and providing there is no prepayment penalties shorten the term of the mortgage.

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It is no secret that the current economic situation is looking rather bleak and it presents some very real challenges for people who want to save their homes. These days, more people than ever are having to face the possibility of foreclosure. Because the economy doesn’t figure to make a major recovery for quite some time, these are the realities that home owners now and in the future are going to have to deal with. If you are wondering how to stop foreclosure, then you will be glad to know that there is some hope. Home owners don’t have to experience dire straits if they are smart about things. If you are going to stop foreclosure, then one of the best ways is by getting in touch with a professional that can help you analyze the situation. All too often, home owners are too caught up in their own situations to really see the solutions that exist. Having another set of eyes can often make all the difference. Some people out there are versed in helping folks with home ownership problems and these people can turn you on to the loan modification process. With this process, the terms of your current mortgage can be changed to reflect the realities of the current economy. The fact of the matter is that even home lenders understand that things are tough right now. That is why they are open to loan modification programs. The programs work in a typical way. They take a look at options ranging from extending the loan to deferring parts of the balance. If you are completely unable to make the current mortgage payments and foreclosure is imminent, then this might be the only option at your disposal. Modification is something that can be done with only a couple of meetings and the benefits are substantial after that.

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Obama’s Loan Modification Program is assistance for borrowers in danger of having their homes foreclosed or for those who dread to default on their mortgage now or in the future. Setting aside $75 billion, the government aims to utilize part of these funds to lenders who participate. The incentives and dole out for lenders, is to make up for costs and any other losses caused by the mortgage modification. If you have to refinance or modify your housing loan, the first and foremost on your list of things to do should be to choose a lender that is part of the program because:

Lenders participating will limit the interest to 2% and extend your credit to as long as 40 years to ensure that you do not become delinquent of your mortgage. Non-participating lenders will charge you rates that are much higher and will not care if you continue to pay your loan or not as long as they get paid!
Lenders participating in the modification program will still entertain your application even if your property’s value has become less than your mortgage. This situation is expected because of the effects of economic recession.

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A loan modification is an option you may have in order to avoid foreclosure. We have assisted many clients in working out loan modifications with Lenders as well as defending against a foreclosure filed against their properties. Many times our law offices are defending against a client’s foreclosure which simultaneously working out a loan modification with their particular lender. Each of our clients have a unique set of circumstances, financially, physically and emotionally. We treat each case with the upmost priority. We are faced daily with situations that are both emotionally challenging and gratifying.

A loan modification is a permanent change of one or more of the terms of your original mortgage. A short sale or bankruptcy does not have to be the only answer to avoiding foreclosure. If you have had some kind of financial hardship which was the cause of or will result in the failure to make your monthly payments a loan modification may be your option. A loan modification will provide for a lower monthly payment allowing you to maintain financial stability and save your home from foreclosure.

Why Do I need an Attorney?

An attorney can review your current financial situation and discuss all your legal options when forming your decision. A loan modification and a foreclosure defense of your mortgage involves many laws that only an attorney can advise you and defend you on. In addition, I have many cases where the client was served with foreclosure paperwork during the loan modification process. It is highly recommended that an attorney handle the modification process and the defense simultaneously.