Is loan modification the best option for stopping a foreclose immediately? A loan modification is when a borrower who is facing foreclosure negotiates a new loan deal with their lender to get their current mortgage to a place where they can make the payment and deal with the amount in arrears.
This is done by changing some of the terms of the original mortgage.
For example, a borrower might work out a deal with a lender to pay a lower interest rate for a set amount of time that reverts to a higher fixed rate for the life of the loan.
Another example would be for the lender to extend the life of the loan, therefore lowering the monthly payments.
Another option of a loan modification might be paying interest only for a set amount of time before resuming interest/principle payments.
These are just basic examples of how a mortgage could be modified to help a borrower to stop foreclosure on their home.
In addition to modifying the terms of the loan, a loan modification may also include provisions to help a borrower to pay the back payments; provisions such as letting the borrower roll the payments that they are behind on into the remaining balance of the loan.
For borrowers who are in danger of losing their homes due to a foreclosure, a loan mod may be the quickest and simplest solution to their problem.
It is definitely worth looking into.
However specialized advise coming from professionals in this field is highly suggested.