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30 July 2017

An Insight Into Loan Modification Oakland

By Amy Brooks

A loan modification refers to a process of restructuring a mortgage by altering certain terms of the borrowed loans so as to make the payment more affordable. For instance, the lender may reduce the interest rate to make your monthly payment affordable. One may also have the principal balances reduced. The lending institutions carry out loan modification Oakland so as to prevent foreclosure which can result from too much pressure on the borrower.

Basically, modifying loans do not only involve reduction of the interest rate but also extending the period of the loan returns or even introducing a new kind of loan repayment plan. Any of those may be done or even the three procedures combined. Modifying loans tends to be easier than defaulting it hence the popularity of the process.

Modifying loans, as well as forbearance agreements, are largely conflicting but usually vary. Forbearance agreements are usually short term and offer solutions to borrowers who for a period remain unable to settle their debt whereas modification agreements are long-term since borrowers are totally unable make any repayments on existent loans.

The process has existed from the 1930s. During the period of Great Depression, for instance, the process of modifying loans was implemented at state levels to prevent any debt foreclosures. In the twenty-first century period of the Great Recession, national policy issues, as well as various actions were adopted to alter the terms on mortgage loans to create stability in the economy.

There are many reasons why you may delay in meeting your mortgage repayment. For instance, because of losing your job, having an illness or a divorce just to mention a few. Hence, it is normally crucial to understand how this procedure functions and what program is best to select. This due to the fact that a few modification programs may ultimately be more expensive. The Home Affordable program (HAMP) is a program that was sponsored and funded by the federal government in 2009.

The benefits under HAMP entail reduced monthly payment to 31% of gross monthly income, reduced interest rate to up to 2%, getting rid of remaining principal balance and even providing a forbearance. Your debt is easily modified under HAMP if at all you meet the set criteria. These include the fact that you must be in default of your mortgage and your monthly payment should be exceeding 31% of your gross monthly income.

Another requirement is that you must be undergoing a hardship, for instance, losing a job, divorce or sickness among others. However, you must have enough money to cater for the modified amount so they require you to provide your tax returns and pay stubs. Finally, there is a trial period of four months for you to qualify.

In the case where you are having trouble making mortgage payments, one may seek help from a mortgage specialist that deals with the modifications process. They work closely with borrowers who are having trouble repaying their mortgage loans and hence are made aware of the best program to use.

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