Mortgage Loan Modification

Mortgage Loan modification is hardship based and seeks to reduce principal and/or interest for the existing loan or loans on the property.

Depending on the situation of the home-owner, a modification of mortgage can have different results.

Mortgage Loan Modification Results

• Reduction in principal

The existing principal balance is reduced and the loan amount is changed to a lower value.


• Reduction in interest rate

The existing interest rate is changed to a typically low interest rate to make the payments more affordable.


• Change in terms of payment

The existing loan terms may be changed to a longer duration - for instance, a 30 year loan may be stretched to a 40 year loan to make the payments more affordable.


• Combination of these terms

A combination of any of the three conditions maybe granted to the home-owner.

Steps involved in a Mortgage Loan Modification

• Application submission

An application for loan modification is submitted to the lender. The application may be submitted through a loan modification company. It is important to review all the information in the application before submitting the application to the mortgage company.


• Lender changes existing terms

The lender will review the application along with the hardship letter and consider a change in terms. Typically, this step involves negotiations between the lender and the loan modificaion company. The lender may request additional documents including but not limited to proof of income and nature of hardship. On successful completion of the negotiations, the lender will put forth new terms.


• Home-owner agrees to the new terms

The home-owner reviews the new terms set forth by the lender and agrees to the new terms. The home owner will get a date to begin the mortgage payments if he had stopped making the payments due to financial hardship.

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