Mortgage modification is the process whereby the mortgage terms are changed outside the original terms of the contract agreed upon by the lender and the borrower (ie, mortgagee and borrower in the mortgage country: Trustee and Trustee under the circumstances of Responsibility of Trust ). In general, any loan can be modified, and the process is referred to as loan modification or debt rescheduling.
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In normal development of the mortgage, the payment is made in accordance with the loan documents until the mortgage is paid in full (or paid off). The lender holds a lien on the property and if the borrower sells the property before the mortgage is paid, the unpaid mortgage is paid to the lender to release the lien. Any changes to the mortgage provisions are modified. Changes may include the following: reduction of yield (usually referred to as interest rate), extension of term of payment (eg extending the period of 30 years to a period of 40 years), or reduction of principal balance of the loan.
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Modified Mortgages in the United States
Following the 2007 real estate recession, the government-mandated Making Home Affordable (MHA) program, and the loan modification aspect, the Affordable Home Modification Program (HAMP) became the answer for struggling borrowers and lenders. The lender is motivated to offer modifications under the Program in the hope that the loan in default will be a (smooth) loan that will be more valuable than the proceeds obtained from foreclosure sales, together with the acceptance of financial incentives from the government. Borrowers, on the other hand, receive fixed interest rates, lower loan payments, often long-term, and sometimes principal reductions (if the property is reversed).
See also
- Affordable Home Modified Program
References
External links
- MakingHomeAffordable.gov
- The Hardest Struck Fund
Source of the article : Wikipedia
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