If you are in default of your mortgage, but you could get back on track with a change to you loan, you may be a good candidate for a loan modification. A loan modification is an agreement with your lender to change the terms of your loan to a point at which you can afford the payments. Just a few examples are reduction in principal amount owed, change to the interest rate, and change from an adjustable rate mortgage to a fixed rate mortgage.

The clear benefit of a loan modification is that you are able to remain in the home.  The traditional alternatives to a loan mod are short sale and deed in lieu, each of which require vacating the property.  The most common down side of a loan modification is that you are generally unable to reduce your principal loan amount due.  In fact, because most loan mods are sought after the borrower has defaulted, the principal loan amount is typically higher because past payment, late fees, attorneys fees, and the like, are all in incorporated into the new principal loan amount.  Because most lenders are unwilling to discuss loan modification terms until after the borrower has defaulted, ending up with a higher principal is typical.

Remember, too, that approval of loan modifications, like other loss mitigation options, are subject to the approval of the the lender.  A common tactic employed by lenders is conditional or temporary loan modification approval.  It is common for a defaulting borrower to receive correspondence or a call from his or her lender stating that they may be eleiglble for a loan modification and that they will be considered after making a handful of additional payments.  Although loan modifications are successfully completed, it's important to key in on the key words of the lender's offer.  The offers are generally crafted in a manner requiring additional money from the borrower and leaving the lender with sole discretion regarding approval.

If you are a homeowner interested in discussing a loan modification with a licensed Florida Real Estate Attorney, call our office at (561)472-0919 or click Palm Beach Foreclosure Attorney and request a consultation online.