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A Loan Modification is a change in of the terms of a loan giving the borrower a more affordable payment and reinstating the loan. Most homeowners in need of help making payments will qualify for a loan modification with there lender. Here are a few facts to help you understand what a loan modification can do for you:

When the terms of the mortgage cause the payments to be more than the borrower can afford and thus putting the home in jeopardy of foreclosure, a loan modification can be a good solution for both the lender and the homeowner. Debt consolidations loans, refinancing, or even forbearances agreements are not the same as loan modifications. They are good long term solutions other hardships that are threatening to the financial budget of a homeowner.

Loan modifications stop the foreclosure and reinstate the loan as they are being modified under new terms that are affordable to the homeowner. There are many reasons why lenders are truly in favor of working with their clients in order to negotiate an equitable loan modification.

Outstanding principal, interest, past due escrow, late fees, and even costs may be negotiated into the new modified loan thus allowing the lender to not loose any money. By modifying the terms of the loan the homeowner now has a more affordable payment and gets to keep the home. With lower payments to ensure repayment by the borrower, the lender has the added time which is actually money in the bank in terms of interest due over time.

The foreclosure is avoided which helps both the homeowner and the Lender. Even though banks normally foreclose on properties and sell them to other buyers for a reduced price, the current housing market has caused the banks to become owners of such properties and unable to resell them. When a bank owns a property they become responsible for the taxes, maintenance, insurance, etc on the properties which will cost them even more money over time then a loan modification. So you can see that a loan modification is a much better financial solution for any lender.

These are a few requirements you must meet to be considered a candidate for a loan modification, the process needs to be started by you:

You have a verifiable reduction in income affecting your monthly mortgage payment.
You must prove you are employed or have a verifiable form of income.
The loan must be on your primary residence, the house in which you live.

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