The current financial storm and collapse of the mortgage industry may lead you to ask the obvious question, “Why would banks be interested in Loan Modification?” Let’s take a look at the current financial environment.
1 Million Home Foreclosures Last Year
A total of 861,664 families lost their homes to foreclosure last year, according to RealtyTrac’s year-end report . The worst is yet to come as Moody’s Economy.com, a research firm, predicts the number of homes lost to foreclosure is likely to rise by another 18 percent this year.Home Prices Spiral Downward Depressed, scared, angry? Home prices have plummeted over 21% from their peak according to the S&P/Case-Shiller Home Price index. it very likely they will default. And adding a flood of foreclosed homes to already slow markets further lowers demand and prices, creating a whirlwind of lower prices and higher foreclosures. As a result, more homeowners who fall behind on their mortgage payments end up losing their homes, according to Jay Brinkman, the chief economist for the Mortgage Bankers Association
Imagine you are a lender and that you let someone borrow money from you so they could buy a house. You and the borrower agreed to some terms for payback of the borrowed money, with one of those terms being that interest would be charged and the borrower would pay some interest with every payment they make.
Doesn’t this seem like the perfect way for you, the lender, to make easy money without working hard for it? On the other hand, let’s say the borrower stops making payments and the housing market crashes, Clearly you want to make your money back, rather than ending up having to take the home back and then sell it at a extremely discounted price.
This is why banks are interested in loan modifications. If they can change the terms of the loan sufficiently that you can afford to keep paying them for many years into the future, they will be happy. They make much better money off a mortgage that is being paid back than they do off a home that they have to go through the trouble of having to repossess.
At this point, it should be clear why a lender would be interested in negotiating your loan and changing some of the terms. The next issue is how to go about getting a loan modification. Click the links for more information mortgage modification or Debt Relief help
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