Wednesday, November 16, 2011

What is a Loan Modification?

A lot of my Bucks County Chapter 13 clients have attempted a loan modification to save their home. So, what is a loan modification?

Essentially, a loan modification changes the terms of the original mortgage. Usually the length of the term (total years) of the mortgage and/or the interest rate are modified so the borrower can fulfill his/her mortgage obligations. Sometimes, but not often, the principal amount owed can be lowered.

It is often difficult to obtain a loan modification. The paperwork can be burdensome and the standards for modification are seemingly high. What occurs frequently is that a client hopes to put their mortgage arrears into a new principle payment through the modification.

If that fails, seeing a Bucks County bankruptcy attorney may provide the Bucks County resident with the opportunity to put their arrears into a payment plan with the trustee to save their home. This may be a great option to save their home from foreclosure and continue to attempt to work on a modification (which I always encourage clients to do).

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