Why do Banks Offer Loan Modification?
If you stop making payments, the bank has several options.
- Attempt to repossess property (a home foreclosure)
- Attempt to collect, or hire somebody to do so
- Give up hope and accept the loss
- Watch you declare bankruptcy and receive little or nothing
None of these options are attractive to you or the bank. Your credit will suffer, and there’s a financial cost to the bank.
Is there another option? Yes - banks offer loan modification so that they don’t have to do any of the above. Loan modification can be less expensive and more profitable for banks, but not in every case.
How do I Get a Loan Modification?
To get a loan modification you generally have to ask. Call the bank and let them know about your financial situation. Just be honest and explain whether or not you’ll be able to make your payments. If they agree, you may qualify for a loan modification.
Banks have different criteria, so there is no way to know ahead of time if you’ll qualify for loan modification - you just have to ask.
What Types of Loan Modifications Exist?
Banks can change the terms of your loan to make the payments more affordable. These changes may be permanent or temporary. In any case, the result is a more manageable payment.
Read on to see tips on requesting a mortgage modification.
