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Homeowners struggling to make their mortgage payments often assume foreclosure is inevitable—especially when loan providers demand past-due amounts in a lump sum and refuse to accept partial payments. However, lenders and federal laws provide a variety of foreclosure defense options for debtors who wish to keep their homes, including loan modifications. These adjustments could substantially reduce your monthly payments, allowing you to regain control over your finances.

How to Use a Loan Modification for Foreclosure Defense

Learning the Basics of a Loan Modification

loan modificationIn a loan modification, the mortgage lender and homeowner renegotiate the terms of the original contract, typically with the goal of lowering the monthly mortgage payment. To accomplish this, lenders may offer lower interest rates, a reduction of the amount owed, or a payment plan with longer terms. If the borrower is already behind on their mortgage, the lender will often add the amount owed to the loan balance, or demand a single lump-sum payment when the loan is paid off.

Requesting a Loan Modification

According to the Department of Housing and Urban Development, homeowners looking for a loan modification should contact their lenders directly. After a careful financial evaluation, the lender will determine whether a modification is possible and present options designed to fit within the borrower's budget.

Considering Other Options

Loan modification is just one option available to homeowners who need foreclosure defense. A Chapter 13 bankruptcy, for example, allows borrowers to catch up on secured debts, while short sales help homeowners avoid a foreclosure on their credit report.

 

Greg Dunn, Bankruptcy Attorney is an established Honolulu law firm committed to helping Hawaiian homeowners get the financial relief they need. Visit their website to learn more about their extensive array of legal services, like them on Facebook for additional insights, or call (808) 524-4529 to discuss your foreclosure defense options today.

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