What is a mortgage loan modification?

A mortgage loan modification is a process where the terms of a mortgage are changed to make the payments more affordable. This can be done by extending the term of the loan, reducing the interest rate, or both. It may also change the structure of a loan such as an adjustable to fixed rate loan.

Mortgage loan modifications became more popular during the housing crisis of 2007-2008 as many homeowners found themselves unable to make their mortgage payments. The federal government established the Home Affordable Modification Program (HAMP) in 2009 to help homeowners modify their mortgages.

Are mortgage modifications still available?

Yes, but not with as many options as before. Currently, you can only secure a mortgage modification through your lender directly. Every lender is different and many may not be willing to work with you or change your loan conditions. Lenders do not have any obligation to accept a request for mortgage modification even during financial hardship.

Can a loan modification stop a foreclosure?

It depends on the situation. If the homeowner is able to make modified payments that are within their budget, the homeowner can apply for the foreclosure process to freeze. However, if the homeowner is not able to make the modified payments, the foreclosure process might continue.

There are many different types of mortgage loan modifications, so it is important to consult with a qualified attorney or financial advisor to see if you qualify for a modification and to understand the different options available to you. Contact an Elk Grove bankruptcy attorney for more information about mortgage modifications and options to stop a foreclosure.