Mortgage modification is a process where the terms of a mortgage are modified outside the original terms of the contract agreed to by the lender and borrower (i.e mortgagor and mortgagee). In general, any loan can be modified.

In the normal progression of a mortgage, payments of interest and principal are made until the mortgage is paid in full (or paid-off). Typically, until the mortgage is paid, the lender holds a lien on the property and if the borrower sells the property before the mortgage is paid-off, the unpaid balance of the mortgage is remitted to the lender to release the lien. Generally speaking, any change to the mortgage terms is a modification, but as the term is used it refers a change in terms based upon either the specific inability of the borrower to remain current on payments as stated in the mortgage, or more generally government mandate to lenders.

Mortgages are modified to the benefit of the borrower in one or more of the following ways:

• Reduction in interest rate, or a change from a floating to a fixed rate, or in how the floating rate is computed
• Reduction in principal
• Reduction in late fees or other penalties
• Lengthening of the loan term
• Capping the monthly payment to a percentage of household income

The borrower can be current, late, in default, in bankruptcy, or in foreclosure at the time the application for modification is made. The programs available will vary accordingly.

There may be modifications made at the discretion of the lender. The lender is motivated to offer better terms to the borrower because of the expectation that the borrower might be able to afford a lower payment, and that a performing loan (i.e. one in which payments are current) will be more valuable ultimately than the proceeds obtained from a foreclosure sale.

The state and federal government may structure a mortgage modification program as voluntary on the part of the lender, but may provide incentives for the lender to participate. A mandatory mortgage modification program requires the lender to modify mortgages meeting the criteria with respect to the borrower, the property, and the loan payment history.

The Mortgage Loan Modification process provides for either a permanent change in one or more of the terms of a mortgagor.s loan, which allows a loan to be reinstated if the loan is behind or past due and results in a payment the mortgagor can afford. This site will give you some helpful tips and hopefully answer your questions regarding mortgage loan modification process.

1. Mortgagee misses mortgage payment.
2. Late notice is send by your mortgage holder.
3. Customer misses additional payments.
4. Bank attempts in writing and by phone to contact customer to resolve.
5. No arrangements are made and customer continues missing payments.
6. Bank issues demand for payment of the note in full. This depends on the note, but most have an acceleration clause.
7. No payments or arrangements acceptable to the bank are made.

1. Bank sends by sheriff or by certified mail Notice of Intent to Foreclose.
2. Bank initiates action in the court system to foreclose.
3. Legal notices as required by law begin to be published in local papers.
4. Notice and waiting periods expire.
5. Court holds hearing regarding banks claim.
6. Court issues order allowing bank to foreclose.
7. Legal notice of actual foreclosure sale and advertisements published in local papers.
8. No payment arrangements or settlements reached with the bank.
9. House sold at auction to highest bidder.

It's all about the timing of the initial foreclosure action. Most people lose their home because they take too long to settle with the bank. Strategies involve payments, short sale refinances, deed in lieu of foreclosure and many other options. There are many ways to save your home from foreclosure, however, it is very important that you seek some professional advice since errors can be costly.

A loan modification is not only good for the homeowner, but it's also good for the banks.

A loan modification is beneficial to the homeowner because it allows them to stay in their home and gives them better loan terms that they can afford. Another advantage to loan modification is it allows the consumer to avoid bankruptcy by reducing expenses so that other financial obligations can be paid back. This ensures they keep a good credit rating.

Loan modifications also benefit the banks since it's better for the bank to keep you in the house and making some kind of payment than it is to spend the money foreclosing on you and then selling for your house for a lower amount at an auction. It's no wonder that banks lose over 50 cents to the dollar on homes that are sold through foreclosure auctions.

Loan modification is a long-term solution that helps the homeowner by:

• decreasing their interest rate
• getting a completely different type of loan.
• extending the term of the loan (the period of time the borrower has to pay the loan back)
• changing from a variable to a fixed rate mortgage

• One way to modify your loan is to ask the lender to increase the term of your loan. This can lead to a decreased payment by giving you more time to pay back the loan. This can save substantial money on a monthly basis, but it also increases the cost of the loan since you pay interest on the mortgage for more time.
• Another easy ways to modify your loan is to ask the bank to decrease your interest rate. Many lenders are willing to do this for people who truly have a hardship and hold a good job and have good credit. You can save thousands of dollars a year, depending on the size of your loan.
• There are other loan modification programs available, but is is advisable to get professional advice since a mistake can be costly.

Certain banks have special programs that are designed for people in your situation. To make is as affordable as possible to decrease your payment while staying in your home, these banks have programs that can be offered by simply calling the bank. These programs exist because the banks realize that not everyone has the money to hire a professional to negotiate on their behalf. The problem with some of these programs is the bank may not give you the best deal available. If you can, it's best to hire someone who knows the best program each bank offers so you know you're saving as much money as possible. Over the life of your loan it can make a big financial difference and might cost you a lot more.

If you can afford a legal representation, it is best to hire a professional for the following reasons:

1. They understand the law and this will prevent a bank from pushing you into doing something that may not be the best for you.
2. Legal professionals understand ALL the programs at ALL the banks.
3. They know the fastest way to get your loan modification approved.
4. They know how to get you the best possible mortgage given your current financial situation.

If you've been denied for a loan modification there are other options available to you to decrease your monthly expenses:

• Debt Settlement can help you decrease the amount you pay monthly on your unsecured , credit card, medical, etc. debt. In many cases you can settle your debt for as little as 40% of what you owe. This allows you to get out of debt sooner and without all the interest fees you would pay if you took longer to pay off.
• Refinance is another option that may be available to you. There are new government programs coming available all the time and by consulting with a mortgage professional who knows these programs they may be able to reduce your payments while allowing you to save your home. It might even save you enough that you can pay off your other debts.
• A short Sale refinance is another options for some people in these situations. Since these can be complicated it is advisable to speak to a professional.

You should be very careful to do proper research before making a decision. You should check the BBB on the company you want to work with and if they have multiple complains you should re-consider. If a company does not require you to have a job or even ask, thenn you should be suspect that they are a scam since you will need to have some money to hire someone to help you. This is what an emergency fund is for, or even consider asking a relative, since losing your home can be a major failure and a costly one. Even if you have to offer your relative some percentage of the appreciation later on, in exchange for helping you now.

Refinancing gives you the chance to replace your current mortgage with a new loan with favorable rate and terms that you can afford. The new loan is offered against the same property as the collateral and may or may not exceed the current loan balance. The new loan funds are used to pay down the current mortgage while any remaining cash can be used to your best advantage.

• Do you want to save more? Your monthly payments will be reduced if you get a low rate or when your loan term is extended. However, with an extended term, your monthly savings will increase but you'll be paying more in total interest for the life of the loan.
• Do you want to pay down your mortgage quickly? You can shorten the length of your mortgage by reducing the loan term. Monthly payments will no doubt go up, but you will be able to save more in the overall interest payment. Moreover, you'll be debt free in a shorter time.
• Do you need extra cash to pay off credit cards? If you have enough home equity, you can borrow more than the current loan balance. With the extra cash, you can pay off high interest debts such as credit card balances or installment loans. You gain out of it as the interest on such debt is not deductible unlike mortgage interest.
• Do you wish to consolidate 2 loans into one? If there's enough equity (due to high appreciation), you can consolidate first and 2nd mortgages and refinance into a single first mortgage. The monthly payment on the new loan is likely to be lower than the combined payments on the first loan and the second mortgage.
• Do you want to convert an ARM into FRM? This allows you to lock in at a low rate. You can thus repay the loan with stable monthly payments rather than variable payments over the loan term.
• Do you want to get rid off PMI? If your current loan balance is below 80% of the new appraised home value, you can go for a home refinance and stop paying the PMI.