A modification is the restructuring of the client's loan. Modification programs offer debt relief by altering the interest rate, the principal amount due on the loan, the term of the loan, or a combination of all of these terms. Lenders and servicers are generally concerned with one thing when considering the approval of a loan modification which is the client's hardship.  Fortunately, the one thing they are most concerned about is ensuring the homeowner can afford the terms of the modified loan.  If the homeowner cannot afford the new terms they would be doing themselves and the client a great disservice. 

Each lender maintains different guidelines for approving loan modifications but the most important things the homeowner can do to qualify is maintain proof of a hardship, be able to make payments on modified terms, and live within the client's means. 

Homeowners that obtain mortgage modifications should ensure they have a written agreement with their lender providing evidence of the modification.  In addition, homeowners should keep records of payments that they made to the lender as well as evidence on the bank's acceptance of these payments.  Errors by mortgage servicers are not rare and homeowners may find themselves in a situation facing a wrongful foreclosure.  Keeping track of their mortgage paperwork and payments can prevent homeowners from being victims of these mistakes.

If you are facing foreclosure,  chapter 7 and chapter 13 bankruptcy is a way for people who owe more money on their mortgage than they can pay right now, to either work out a plan to repay the money over time in a chapter 13 or to wipe out most of their debts in a chapter 7 case.  Some individuals need to consider this as a viable option.  Contact Attorney Greg Dunn, Honolulu Hawaii's premier chapter 7 and chapter 13 bankruptcy and debt relief attorney for additional information.