Why Lenders are Open to Home Loan Modifications
The economy is in a state of extreme crisis, and one of the major components of the trouble with the American economy is the mortgage market. In the early part of the 21st Century, lenders saw an opportunity to spike their profits by offering new and ‘creative’ mortgages to people who would likely not have qualified for a ‘traditional’ mortgage. Eventually, the homeowner bubble burst, and the resulting disaster is one of the main drags on the economy.
As a result, lenders have been foreclosing on homes at a record pace. While many would assume that lenders have no problem with retaking homes, the reality is that most would like to find a way to avoid this process for many reasons. The bottom line, and the driving force behind the crisis in the first place, is that most lenders are publicly-traded corporations whose stock value defines a company’s success or failure.
Therefore, lenders are hesitant in many instances to take back a property because most of the time, those properties have a value that’s less – sometimes much less – than the amount that’s owed on the loan. In addition, the reality of the current real estate market is such that lenders are generally unable to sell these repossessed homes for a price that’s even close to the break-even point, and they are often sold for an enormous loss.
Lenders need to turn their own operations around, which is why they are open to a viable alternative to the foreclosure process if one presents itself. The government has stepped in with a wide-ranging assistance program, and borrowers are beginning to pursue the option of a home loan modification in higher numbers.
A home loan modification is a process by which the existing loan on a property is changed, whether it involves lowering the amount owed, lowering the interest rate or lengthening the term of the loan. Some home loan modifications incorporate several of these options.
However, if you are facing this sort of problem, you need to work with an attorney despite the lenders’ willingness to work out a deal. There are still laws that must be followed and negotiations that must take place, and you need the skill, knowledge and experience of a home loan modification lawyer to make sure that you get an equitable solution to your problem. Contact the attorneys at Phillips & Associates today to schedule an initial consultation.
Tags: borrowers, default, foreclosures, home loan modification, home loan modification lawyer, lenders, real estate, recession