Loan Modification

Loan modification is a term used to describe actions taken by a bank or lender to help make a loan more affordable for a homeowner in distress.

This is a win-win situation for all parties involved: It allows the bank to save itself money, time and the aggravation brought on by the foreclosure process; it allows the borrower to stay in the home; it prevents the blight brought to the neiborhood when a home is abandoned. Finally, it keeps the house in the city's tax coffers and saves the city the money it would have to put up in landscape maintenance.

Lately, there have been many keen developments that have caused us to become very optimistic that many more of us will be able to avoid foreclosure than has been the case in the past.

Some of the key developments are: 1. when the FDIC took over Indymac bank, they promised and are in the process of providing it to many of its borrowers who had obtained so called "exotic loans. They immediately implemented a moratorium on all foreclosures.

2. Through a settlement between the Attorneys General of 7 states and Countrywide, Bank of America (the current owner of Countrywide) will modify the loans of all of its borrowers who got loans whose interest rate has increased or will increase in the future.

3. Citigroup has on its own done the same thing for all their borrowers in similar situations. Each day more and more lenders are following suit.

All homeowners dealing with these lenders who are in similar situations can expect a moratorium on foreclosures for the near future. With this moratorium, lenders to allow the homeowners some time to be able to work out their loan with them.

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