Difference between Reinstatement and Loan Modification

When one buys a home, a mortgage agreement is made and when this mortgage agreement has been defaulted due to insufficient payments, the lender will demand that the money owing to be paid in full.


The mortgage agreement requires the homeowner to pay so much per month for a stipulated time. If he does not keep making the payments, the lender will issue a letter demanding that the money should be paid in full to reinstate the loan. This could mean a huge sum of money and so the homeowner may not be able to repay the full amount, leading to the beginning of a foreclosure procedure.

Loan Modification

Can you get loan modification help you if you are in this situation? Basically, a loan modification is changing the current loan agreement to one that you are able to repay. It includes things like reducing the interest rates and the money that has not been paid to be added to the loan and sometimes the lenders will also extend the repayment period. These steps are taken to lower the monthly repayments and fit into your budget.

Reasons Why Lenders Often Consider a Modification Loan

Foreclosing on a house costs the lenders money due to court fees and your home might be sold for less than the money you spent on it. While it is on the market, the house needs to be looked after and it affects their balance sheet because it cannot be shown as an asset.

That is why it is worth considering using a loan modification attorney to negotiate modifying the loan agreement in order to to suit your pocket and save your home. There are companies like loanmoddepot.com that are able to assist you if you find yourself in that situation.