I have been asked by several friends and yes even some family members exactly what is a loan modification and how to avoid foreclosure? I am a real estate broker with 20 years experience so here is a simple explanation for anybody that’s interested.
By now most people have heard of some form of mortgage help for struggling homeowners to help them stay in their home and avoid foreclosure. One process for doing this is known as Loan Modification. Before I explain the details of a loan modification; let me give a little bit of information on what a mortgage is and the power it possesses.
Banks and/or mortgage companies will lend prospective homeowners the amount of money it takes to buy a home provided the homeowner is willing to sign a piece of paper known as the security deed or simply put the “mortgage note”. This promissory note states that the borrower can continue to live the home as long as they continue to make monthly payments to the “guarantor of the loan” or bank.