Loan modification process is often sought by homeowners who wish to stop foreclosure of their mortgage loan. This has been common problem for many people who eagerly agreed to take up the loan, mortgaging their property. When they actually missed paying back the loans, the bank makes an intervention and decides to foreclose the loan by selling the property.
Stop foreclosure becomes the only option for homeowners, who decide to increase their debt by agreeing to loan modification. There are agencies who negotiate between homeowners and the bank on stop foreclosure through the process of loan modification.
Foreclosure can be stopped by homeowners if they take necessary precaution earlier. Homeowners usually become attracted to the availability of easy loans offered by banks. The banks start extending loans to a variety of customers. They even hire marketing agencies which carry out intensive advertising campaign, luring people to take loans. The availability of easy loans motivates the people to reach out the bank and fill out the loan application form.
Whether there is a need for money or not, but people do move ahead and agree to take up the loans, often without heeding to the terms and conditions. Banks extend secured loans to people on the basis of mortgaging the property. The bank does an assessment of the property and based on its market value, extends the loan. In cases where prime customers are involved, the bank offers a low rate of interest. But for people who have low financial credibility, the rate of interest is higher.
The underwriter who sanctions the loan seeks more and more documentation from the loan applicant until there is some level of satisfaction regarding the financial credibility of the person. The bank finally agrees to give the loan. Sometimes, it is claimed that the banks deliberately extend such loans so that the customers with poor financial credibility actually end up with default loan repayments and then the bank can take over the property and also keep whatever earlier payments were made by the customer. But, progressively speaking, banks do incur loss when they undertake foreclosure.
Even banks avoid this option and offer loan modification to the customer. The homeowner often ignores such critical terms and conditions while agreeing to the first loan and does not think of taking a legal opinion. He ends up in crisis not only with bad credit but also with the harassment of the bank. Homeowners can avoid foreclosure if they take some measures beforehand. It is important to take legal opinion while taking the loans and go through all the terms and conditions of the bank.
If there is any disagreement with the terms and conditions, it has to be pointed out to the bank and negotiate to change it. Homeowners need to be consistent in making loan repayments. If they feel that in the coming months they are unable to repay the loan amount, then they need to inform the bank earlier by issuing the hardship letter to the bank, detailing the problems faced by them.