Loan or mortgage modification is the process whereby the terms of a loan are modified beyond the original terms agreed upon by both the lender and the borrower. In a perfect world, a loan is paid off within a set period of time as interest and principal payments are made regularly. At the time of complete pay-off for a loan, the lender then releases all liens on the property to the borrower. If the borrower decides to sell the property prior to fully paying off the loan, the unpaid loan balance resides with the lender and carries over to a subsequent buyer.

Any change to a loan is considered a modification, however the term has become synonymous with home and property owners who are unable to remain current on their set loan payments. Loan modifications generally include a variation to a loan’s outstanding principal, a decrease in interest rate and/or the monthly payment.

Types of Loans That Can Be Modified

The modification of a loan on behalf of a borrower can play out in one or more of the following ways:

  • A reduction in outstanding principal
  • A reduction in late fees
  • A reduction in penalties
  • A reduction in interest rate
  • A change from a floating interest rate to a fixed rate
  • A change in how a floating rate is decided
  • A lengthening of the loan term
  • Adjusting the monthly payment to reflect a percentage of household income
  • Utilizing the Mortgage Forbearance Program

Home and property owners may find themselves in a variety of situations at the time of loan modification, including being late on their payments, current, having recently defaulted or in the process of bankruptcy or foreclosure. It is to a lenders advantage to find a viable payment solution with borrowers by way of loan modifications as that will ensure maximum payment versus the time and cost of a foreclosure.

Loan Modification Options

You never know when circumstances may arise that could render you unable to maintain mortgage payments based on financial distress from a medical emergency, the loss of a loved one or the loss of critical income from a layoff. Our attorneys will help you explore debt relief options and to understand the viability of a loan modification. At our Southern California offices we support clients from the San Fernando Valley, Los Angeles, Orange County, Riverside and San Bernardino, speaking to your lender on your behalf to reduce your principal balance, lower interest rates and many other potential solutions to your inability to sufficiently pay your loans.

Contact a Loan Modification Attorney Today

We are proud of the rock-solid reputation we have earned among our former clients and colleagues and look forward to providing you with high quality legal assistance as you deal with the possibility of Chapter 11 or 13 bankruptcy or foreclosure on your home. Please contact our offices located in Sherman Oaks and Los Angeles today to speak with one of our bilingual staff members and to start the process of financial recovery. As a Southern California debt relief agency, we are standing by to assist you. Call us at (213) 699-3055 today for a free consultation.