Changing or amending one or several aspects of a mortgage agreement is called loan modification. Loan modification is normally used by mortgage companies to help mortgage holders but can be used to alter the terms of any loan or debt obligation.

Over the last several years the amount of loan modifications used by home owners has grown exponentially from just a handful to thousands. The reason for the sudden increase in modifications is the current mortgage and financial crisis which has impacted real estate markets across the country.

Congress has decided that loan modifications are such a help for desperate homeowners that they are attempting to incentivize mortgage companies to offer them to their customers.

Modifications can help amend the terms of a contract to be easier on borrowers. For instance, monthly mortgage payment amounts could be lowered or late penalties reduced. The most common use for loan modifications is to lower monthly payments or interest rates.

A number of mortgage holders have found themselves falling behind in payments after experiencing a dramatic jump in the periodic payments. Either because of a known increase or rate readjustment many property owners have unexpectedly found themselves with a mortgage payment they are unable to afford. Loan modification makes it possible to control rising costs.

Home owners eligibility for loan modification and other assistance programs is dependent on several factors including payment history and current mortgage repayment status.

Mortgage modifications are offered by mortgage companies that do not want to have to go through foreclosure proceeding though both sides must agree to terms for any deal. Foreclosure can not only ruin a borrowers credit but it can cost lenders significant sums of money as well. For many, reduced monthly payments is preferable to trying resell the home.

To determine if you are a candidate for loan modification you would need to speak with your mortgage company. There are several factors they will review when considering your application for assistance.

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