A loan modification refers to the process of altering the original payment agreement between a lender and a borrower. In most cases, a loan modification is done when the borrower has difficulty in making the monthly payments. Lending institutions generate revenue from the monthly payments–which includes interest on the loaned amount–paid back to them by borrowers. However, if the borrower defaults on the payments (i.e., is unable to pay back the loan), they lose both the loaned amount and the accrued interest.
Renegotiation of the Original Loan Agreement
Foreclosure or bankruptcy means that the lending institution will only get back a percentage of the original loaned amount and zero interest, which will impact negatively on the company’s bottom line. Therefore, loan modifications are advantageous to lending institutions since it renegotiates the terms of the loan agreement and enables the borrower to pay back the loaned amount and the agreed-upon interest.
Prevents Foreclosure
Usually, loan modifications increase the period of time the borrower has to pay back the loan, thereby reducing the amount of monthly payments. However, such an extension will entail an increase on the overall interest payable. Individuals with mortgages who can no longer afford the monthly payments due to a change in their financial situations will benefit from such an extension since it prevents them from defaulting on the loan. This will prompt the lending institution to foreclose on their homes.
Review Terms and Conditions of a Loan Agreement
When considering a loan modification, it is recommended that individuals engage the services of loan modification lawyers in Hagerstown. Most individuals are not conversant with the legalese used in documenting the terms and conditions of loan agreements, and as such, they require the services of legal experts. Loan modification lawyers in Hagerstown can help to review the terms of a mortgage and determine if a modification–such as an extension of the payment schedule–is in their client’s best interests.
Depending on the nature of the loan agreement, loan modification lawyers in Hagerstown can get the interest rates reduced, thereby saving their clients a lot of money. This means that the borrower gets to pay less money each month. Individuals should visit Law-margulies.com to benefit from the expertise of loan modification lawyers.
