How Do Mortgage Loan Modifications Work?

A loan modification is usually the last and perhaps the best hope for millions of Americans at risk of losing their homes due to defaulting on their loan payments. A loan modification is restructuring an existing mortgage in order to escape a possible foreclosure.

Typically, loan modifications comprise two main things; lowering an inflated variable interest rate and lengthening the life of a mortgage, thus reducing monthly payments. Loan modification restoration has become a norm today due to the increased interest rates on various mortgage loans.  In most cases, the mortgage company will not be the one recommending a modification but the homeowner making an application to evade the foreclosure.

How to Apply for a Loan Modification?

Typically, you are expected to write a formal mortgage modification hardship letter to your mortgage company. The company is not legally mandated to reconstruct mortgages, so you should not expect them to approve your request automatically. Many of the lenders will actually give you a difficult time getting your request approved and you may even be forced to seek help from a loan modification attorney or company.

You have the highest chance of getting your loan modification request approved if you work with a reputable agency, like This agency has professionals and experts who are experienced in negotiating  with lending institutions.

What Happens After a Loan Modification Request Is Approved?

A bank or lender will be more willing to agree to the terms of a loan modification restoration that have been arranged by an expert. If the lender denies the request, you will be informed by the agency and given the reasons as to why. If the loan modification request has been approved, the new terms will be processed through the loan servicing department. The amortization of the loan is mostly not done during the loan modification. Although the adjustment will take some time to be enforced and the bank may even accept a suspension of payment until the mortgage loan modification is in effect, the homeowner is expected to resume normal payment and repay all debts inclusive of interests.