The Basic Facts Of Mortgage Modification
Sometimes the lender and the borrower have to negotiate outside the terms and conditions of
the mortgage. In dire necessity, it is possible to make necessary modifications outside the
original terms of the agreed contract between the lender and the borrower. In the contract of
mortgage, related to the borrower’s property, the lender and the borrower are technically
mentioned as the mortgagor and the mortgagee respectively. The process of mortgage
modification allows the mortgagee another scope to rethink the future of his mortgaged
One may wonder how these modifications are done and what the possible types of
modifications are. The mortgagor might agree to reduce the default amount, payable to him by
the mortgagee, to a certain extent. He/she might negotiate with the mortgagee by reducing the
rate of interest. The lender can do away with the floating rate and may opt for a fixed rate
considering the borrower’s financial status. The mortgagor can make a further modification in
the amount of penalties or late fees, if he/she wants to. These little modifications outside the
original contract of mortgage prove beneficial for the borrower or the mortgagee. Mortgage
modifications can also be made regarding of the loan term. There is a possibility for the
mortgagor to extend the loan term for the benefit of the mortgagee.
This type of mortgage modification allows the borrower some extra time to organize his/her
finances. In dire financial crisis, an extended time limit gives the borrower another chance to
rethink the whole financial tussle in a new light and take the right decision with the newly
modified terms and conditions set by the mortgagor. Another type of mortgage modification is
possible, if the mortgagor comes to an agreement that a percentage of the household income of
the borrower would be considered as the substitution for the monthly payment, payable to the
mortgager by the mortgagee.
In certain cases, it is possible for both the mortgagor and the mortgagee to come up with a new
mortgage forbearance programme after negotiating with each other. During these types of
mortgage modifications, it is most important to see whether both the party agrees on each and
every term being set outside the original mortgage contract. The modified terms should serve
both the ends, though in most cases the mortgage modifications concern the borrower more
than the lender. Various types of mortgage modification programmes come to operate
depending on whether the borrower is current, or late, or in bankruptcy, or in default, or in
foreclosure. Sometimes the lender himself/herself insists on a mortgage modification if he/she
finds that little modifications in the terms and conditions might be beneficial for him/her.
Mortgage Modification usually has a huge impact on the foreclosure sale of the mortgaged
property of the borrower. At times, the mortgage modification programmes are structured by
either the federal or the state government. However, any mortgage modification programme
has to meet the criteria of both the parties keeping under consideration borrower’s property
and his/her history of loan payment.
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