Do you really know what a Modification is? How about Forebearance or a Short Sale?

What is a loan modification?

A loan modification is precisely what it sounds like. It is a change of the current terms and

conditions of your loan to better suit your finances and allow you to keep your home and become

current with your payments. These changes can include but may not be limited to altering the

interest rate, waiving of late charges, reduction of principle, removal of adjustable rates to be

replaced by fixed rates and several others. These changes will be negotiated and made on a

case by case basis. Many people find this to be an excellent alternative when traditional

refinancing is not available if they are having trouble making their payments or will not be able to

make the foreseen payments as a result of an adjustment in their interest rate.

What is forbearance?

Forbearance means you are allowed to delay or alter your payments for a short period of time. It

is understood that there will be an increase in your payments temporarily until your account is

brought current. There will be no fundamental changes in the original terms of the loan. A

modification will change the terms of the loan and provide you with the peace of mind that your

new agreement is tailored to your current financial situation. In addition, the past due amount

owed the lender of the loan is also subject to negotiation and can be substantially mitigated if not

entirely abolished.

What is a short sale?

A short sale occurs when a borrower owes more on a home than its fair market value. In order

to avoid foreclosure proceedings and damage that does to one’s ability to open lines of credit in

the future, the borrower will elect to sell the home below market value after reaching an

agreement with the lender to settle the debt for less than what is owed.