A loan modification company, also known as a

mortgage modification Mortgage modification is a process where the terms of a mortgage are modified outside the original terms of the contract agreed to by the lender and borrower (i.e. mortgagee and mortgagor in mortgage states; Trustee and Trustor in Trust Deed state ...

company, is a business that helps homeowners modify the terms of their home

loans In finance, a loan is the lending of money by one or more individuals, organizations, or other entities to other individuals, organizations, etc. The recipient (i.e., the borrower) incurs a debt and is usually liable to pay interest on that d ...

mortgages A mortgage loan or simply mortgage (), in civil law jurisdicions known also as a hypothec loan, is a loan used either by purchasers of real property to raise funds to buy real estate, or by existing property owners to raise funds for any pu ...

. When a mortgage is modified, the original terms of the home loan contract between a

lender A creditor or lender is a party (e.g., person, organization, company, or government) that has a claim on the services of a second party. It is a person or institution to whom money is owed. The first party, in general, has provided some property ...

and a

borrower A debtor or debitor is a legal entity (legal person) that owes a debt to another entity. The entity may be an individual, a firm, a government, a company or other legal person. The counterparty is called a creditor. When the counterpart of this ...

are renegotiated and then altered, usually in the favor of the borrower. Many homeowners choose to obtain modifications to their home loans when they are struggling to pay their mortgages or hope to avoid

foreclosure Foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender by forcing the sale of the asset used as the collateral for the loan. Formally, a mort ...

. In order to expedite the loan modification process, homeowners may rely upon the services of a local loan modification company. By working with company that handles loan modifications, homeowners "receive the advice, resources and services they need to obtain the best terms possible for their modification while avoiding scams, which are prevalent in the loan modification industry."

Loan modification terms

Homeowners that successfully obtain loan modifications while working with a loan modification company may: * reduce interest rates * reduce principal * reduce penalties and late fees * increase the length of loan terms Additionally, homeowners who are facing foreclosure may be able to remain in possession of their homes if they work with their lenders to modify their mortgage. Loan modification can also make homeowners’ monthly loan payments more affordable.

Loan modification programs and mortgage modification companies

Loan modification programs are offered by loan modification companies and can be very helpful to homeowners who are struggling with their mortgages. Many of these programs enable homeowners to pay zero advance fees, reduce monthly mortgage payments and stop foreclosure. Loan modification companies can also inform homeowners of federal programs, which may be advantageous. There are numerous federal loan modification programs that homeowners can partake in, like the FDIC Loan Modification Program. However, homeowners must meet government mandated eligibility requirements before they can enroll. The program offered by the FDIC has two main goals: 1) Determining a payment the borrower can afford... 2) Protecting investors’ interests... Another more recent program is the Homeowner Affordability and Stability Plan (HASP). On February 18, 2009, President Barack Obama announced this $75 billion initiative, which has one aim, to make housing affordable for all U.S. residents. The HASP is a "comprehensive plan to help responsible homeowners avoid foreclosure by providing affordable and sustainable mortgage loans." As part of the HASP, there are 3 distinct programs depending on borrower needs:http://financialstability.gov Financial Stability Program *

Home Affordable Modification Program The Making Home Affordable program of the United States Treasury was launched in 2009 as part of the Troubled Asset Relief Program. The main activity under MHA is the Home Affordable Modification Program. Other programs under MHA include: * Princ ...

: HAMP *

Home Affordable Refinance Program The Home Affordable Refinance Program (HARP) is a federal program of the United States, set up by the Federal Housing Finance Agency in March 2009, to help underwater and near-underwater homeowners refinance their mortgages. Unlike the Home Affo ...

: HARP * Home Affordable Foreclosure Alternatives: HAFA

Loan modification software companies

Loan modification software companies have been developed in order to be able to handle the demand for proper analysis. Loan modification software companies have been developed both for existing loan modification companies and also as a do it yourself model. * Loan Modification Company Software: Software built for existing companies to help process paperwork and do analysis. These range from customer relationship manager (CRMs), to online portals and also internal analysis.

External links

{{Reflist Mortgage industry of the United States Mortgage Loans Personal finance