Sunday, December 9, 2012

What is Loan Modification

Now-a-days, most of the borrowers are looking for ways to get their loans modified; what is loan modification? Why do borrowers need such facility? Usually, borrowers who are facing some kind of financial problem and are unable to payback their loan amount or monthly loan payments approach the lenders to change the terms and conditions of their loans; this process of altering the loan terms is referred to as loan modification. The term is used synonymously for mortgage modification, development of a workout plan for loan payment and restructuring of loan; all of these terminologies have one feature that is modifying the terms and conditions of the loans. It is important for the borrowers to understand the factors that are crucial for ensuring that the process of loans modification is properly implemented. When borrowers enter into agreement with lender for modification of their loans, usually they end up making wrong decisions. Although lenders try their best to provide best services to their customers but all of them are not honest with the borrowers.
It has been found that loan modification is demanded by the borrowers only in case of emergency situations such as unaffordable payments for mortgages and business foreclosures. In order to help the borrowers in paying off their mortgage loans or completing the foreclosure process properly, banks and lenders are offering their valuable services so that they can discourage them from obtaining any sort of legal assistance such as hiring lawyers. Since there are many banks and lenders who promote them as loan modification specialists, it is important that the borrowers approach those professionals who will help them out of their financial distress. 
The foremost thing that needs to be done is to do market survey so that borrowers have sufficient information about the lenders who are offering loan modification services and then compare among them so that right decision can be made which will resolve the matter. Whenever anyone wants to go for loan modification process, one point needs to be kept into consideration that borrowers need to be honest with their lenders; every detail needs to be provided with real facts so that the lender can handle their matter with accuracy. There is no harm in disclosing the things that put the borrowers in such financial jeopardy; for instance, if the financial problem is caused because of gambling or fraud or any other reason, then truth needs to be told to the lender. 
Before reaching the lenders for loan modification, some paperwork needs to be done by the borrowers so that the lender can review all relevant information and propose a solution for modification of loan only if the borrower qualifies for the process. The important documents that will be required by the lender are information about the borrower’s personal accounts, monthly income amount, income tax-return sheet, information about saving and other assets, details about first mortgage, account balances and monthly payment amounts of all debts including monthly payments that are due on the credit cards and etc. Hence, it is advised to the people going for loan modification process that they gather information about the mechanism of the process and find suitable lender who will provide genuine service to them.

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