Understanding Loan Modification Programs

There are a number of home loan modification programs available to home owners who are struggling to pay their monthly payments.

Three main programs

If you have a loan being serviced or owned by Fannie Mae they run a streamlined modification program. The loan modification service that they provide is that they will lower your repayments to be lower than 38% of your monthly income. The way it is done is by lowering the interest rates or extending the length of time for the repayment period. There are some instances whereby they will reduce the principal balance as well.

The FHA also has a partial loan modification service which is a partial claim mortgage loan modification. To qualify for this program you need to have your home insured by the FHA and if you are in arrears with your payments a separate deferred loan is put in place and you use these funds to pay off the arrears. This however only gets repaid once you sell or refinance your home.

The third option is the private lending industry which is also offering loan modifications. In partnership with the government, they will lower the loan repayments to about 30% of your monthly income. It is also achieved by extending the loan repayment period, lowering the interest rates and in some instances adjusting the principal amount. Even though it is done in conjunction with the government the private loan modification service providers are allowed to publish their own regulations.


These are the three different loan modification programs that are mainly used and using a loan modification firm like Loan Modification Depot you are able to find out the exact procedures, documentation and whether you qualify or not. Don’t risk losing your home and let the professionals help your loan modification process.