What is a loan modification?
Loan modification is the altering of one more characteristics of loan as originally negotiated because the borrower is now unable to make regularly scheduled payments. The is to modify the borrower’s existing contract so that the borrower can now consistently pay his mortgage as well as other debts.

Some loan modifications may are temporary or permanent interest rate reductions, principal balance reductions, lengthening of loan term, temporary payment forbearance or even adding a temporary interest only option.

How common are loan modifications?
Today’s financial climate has increased the need for many borrowers to try to negotiate loan modifications in order to save their homes from foreclosure. As of February 2010, there were over 68,000 new foreclosures in California alone.

Why would a bank modify a loan? Why wouldn’t they just take away my house?
Banks are not interested in being in the real estate business. Banks make money by reselling the mortgage notes of borrowers who are paying their mortgages on time. Due to the lessening equity positions of most borrowers and worsening national housing markets, most banks are now more willing to negotiate instead of foreclosing on a home where a modification would minimize the bank’s overall losses.

What must happen for a loan modification to be successful?
The loan servicers must be provided sufficient information about the homeowner that will convince them that the bank will sustain a greater loss at foreclosure than they will if a loan modification occurs. In these cases, it is in the bank’s best interest to modify the loan, forgive some of the debt or reduce the monthly payments to an amount affordable to the homeowner – to the benefit of the homeowner as well.

Who should consider refinancing instead of a Loan Modification?
Ideally, a borrower with an undesirable loan should try at first to refinance into a more attractive mortgage which will provide future financial benefit for the borrower.

Unfortunately, this simply is not possible for many homeowners. Because the housing market is so depressed, the bank will not want to refinance a house that is now worth 20 or 30 percent less than its original purchase price. If your current equity position in the property is such that this is not possible or, if you are currently in default, then a loan modification is likely the next best solution.

What are the fees for a loan modification?
We do not collect any fees until we have completed our service of providing loan modifications. Borrowers are always free to negotiate with lenders themselves.

Our firm is compliant with Senate Bill 94 which was passed October 11, 2009 regulating advance fees for loan modifications.  Our firm only collects monies after we render services outlined in our agreements.  This will give our client's peace of mind, knowing they are working with a reputable firm that is willing to work on thier case and bill them only after we completed our duties.