Loan Modification - What Is A Loan Modification?

A Loan Modification is a modification to the terms of an existing loan made by a lender in response to a borrower's long-term inability to repay the loan. Loan modifications typically involve a reduction in the principal balance, interest rate or an extension of the terms. In some cases a different type of loan or any combination of the three. A lender might not be open to providing a loan modification to a borrower unless they are behind on their mortgage payments at least 4 months. By this time their credit is ruined and the lender or mortgage servicer can profit further by negotiating a forbearance agreement and collecting more fees.

A Loan Modification should be done by a Law Office and will stop foreclosure.

A Law office can use advanced legal techniques to achieve the most aggressive results for the client. An Attorney understands State and Federal laws as well as lending regulations. In some cases of RESPA or TILA violations an Attorney can threaten a recession of the loan or litigation, causing the lender to return ALL fees and interest paid through the loan. A Loan Modification company simply submits a package similar to a loan submission to have the lender review and decision. This DOES NOT achieve the best result for the borrower. In matter of fact it could make matters worse due to the fact one has exposed themselves to the lender without properly evaluating the entire situation. If the lender or broker has misrepresented the terms or worse yet committed bank fraud a Law Office can and should use the necessary means to bring the lender or broker to their knees to modify the loan and forgive some of the principal. In most cases a Real Estate Law Office can stop foreclosure with out bankruptcy simply by calling the lender or mortgage loan servicing company and getting a 30 day extension for a loan modification.

Why should you use a Real Estate Attorney and not an Attorney based or Attorney backed Loan Modification Company?

A Law Office that specializes in real estate law can negotiate a loan modification agreement  to stop foreclosure and get their client affordable mortgage payments. A loan modification with an attorney is different from forbearance and in most cases a forbearance agreement will require a borrower to bring in 100% of the arrearages. This is usually impossible for home owners already struggling with finances. A forbearance agreement provides short-term relief for borrowers who have temporary financial problems, while a loan modification agreement is a long-term solution for borrowers that normally will reduce the interest rate, change the terms of the mortgage and may reduce principal balance a combination of all three.

Example of a loan modification for an "option ARM" successfully completed from the Feldman Law Center in California.       

We have completed the modification on this borrower the following are the terms of the loan modification:

New UPB $842,442.17

Term 40/30

P&I $3,192.29             

Escrow $771.05               

PITI $3,963.34            

Due date 11/01/2008 (1st modified payment due in 2 months)        

Maturity date 04/01/2036       

Interest Rate 3.149% for the 1st two years, 4.149% for the 3rd year, and 5.149% on the 4th year and for the remainder term of the loan

Contribution $310.00

This client had a 7.50% interest rate and the loan recast to a $6,700.00 monthly payment. As you can see this is a drastic interest rate reduction with no negative amortization.

You may contact the FELDMAN LAW CENTER and request to see the clients' actual document or listen to the recorded testimonial!

Loan modification is a term very unfamiliar to homeowners but not for very long. What most people are coming to realize is that losing their home to foreclosure is becoming a real possibility. Home foreclosure in America today is at an all time high and is affecting many homeowners that never believed they could lose their home to foreclosure. Homeowners are feeling the crunch of higher interest rates, fuel costs, and a slowing economy. A loan modification may be the only way for a homeowner to save their home. Negotiating with the bank for a modification of your home loan can be an overwhelming process for many homeowners. Major lenders such as Countrywide bank, Indy Mac bank, Wells Fargo, Bank of America, WAMU, New Century, Quicken Loans, Aurora, Aegis, EMC Mortgage, CITI Mortgage, Chase Bank, are overwhelmed with defaults and foreclosures. That is why retaining the services of an experienced law firm or real estate attorney rather than a loan modification company is of extreme importance. I have been around the mortgage industry for years and now find myself in the mix of the mortgage mess with an Option ARM loan that is due to explode in September.

The Mortgage Meltdown has hurt our entire economy as many families are facing foreclosure due to toxic mortgages and declining property values. California, Florida, Nevada, Arizona homeowners are the main sufferers as well as many of the Midwestern and east coast states. New mortgage laws to protect home owners are now in affect. If you want to find mortgage law information got to www.feldmanlawcenter.com or for foreclosure laws in your state you can simply Google your city and state foreclosure laws or find them on the Feldman Law Center web site. There is a wealth of information about loan modifications and other real estate services. In some cases the home owner may chose not o keep their home. In these instances an attorney can offer a deed in lieu of foreclosure and get a settlement offer from the lender.  The truth is these people can hire an Attorney to represent them with their lender and save their home and their hard earned credit. Lenders are facing record losses and may not be willing to help home owners unless they are forced to listen. A letter of representation from a licensed real estate attorney seems to get their attention fast. You can find Mr. Steven Feldman at http://feldmanlawcenter.com/home.html