My co-author for Foreclosure Self-Defense For Dummies, Ralph R. Roberts, was recently named the official spokesperson for Federal Loan Modification Law Center – a legal firm that renegotiates mortgage loans with lenders on behalf of borrowers/homeowners facing foreclosure. The primary goal of a loan modification is to lower the monthly mortgage payment to a level of affordability, so homeowners can keep their homes and lenders can convert a non-performing loan into a performing one.
A loan modification accomplishes its goal by having the lender adjust one or more terms of the original mortgage loan:
- Lower the interest rate.
- Convert an Adjustable Rate Mortgage into a low-interest fixed-rate loan.
- Extend the term – to spread the payments over a longer period of time.
- Reduce the principal balance (somewhat rare).
In addition, lenders are often willing to forgive penalties or late fees and roll delinquent or missed payments into the principal balance, so homeowners can pay off the delinquencies over time rather than all at once.
According to Ralph, homeowners may be able to negotiate with their lenders on their own behalf, but an attorney can often negotiate a much better deal.
