How Loan Modification Works In Florida

With the recent financial collapse, the declining job market, and plummeting housing prices, many homeowners have had a hard time keeping up with their payments. Therefore, recently the topic of loan modification has become very hot. It’s hard to watch a television program without an advertisement or two about the topic of loan modification, but what exactly IS loan modification and can it truly help homeowners modify their current mortgage for a lower rate? This article will answer these questions and more.

In a nutshell, the broad term “Loan Modification” refers to the process of changing the terms of a homeowner’s mortgage. This will typically include a process whereby the loan is reinstated if it was in default, and/or the payment will be lowered to a level that the homeowner can afford. Obviously, this is a very hot topic with the current economic situation across the globe, and especially in the state of Florida.

This is a valuable practice for the lender as well, because when your loan is in default (you have been unable to make the payments), it’s very costly for the lender to foreclose on your home and resell it. Instead, it is often cheaper to simply work with the borrower to adjust payments until they are back on their feet.

However, this practice has attracted many illegitimate lenders, and those that practice lending that does not fit within Federal or Florida lending guidelines. Therefore, the government has cracked down on the rules and regulations of loan modification. Recently, president Obama laid out a loan modification plan to help homeowners in distress. Some of the new principles he put in place are the opportunity to lower payments to keep homeowners in their homes, reducing the total percentage of the borrowers mortgage expenses to 31% of their income (with the government chipping in to cover the difference), and they even extended the term of loans to up to 40 years; a full 10 years longer than the traditional 30 year fixed rate mortgage.

These loans have been popular in Florida because it was hit hard when the housing bubble burst in 2008. However, the State of Florida has it’s own regulations in addition to Federal regulations that must be accounted for. Before seeking any advice on a Florida Loan Modification, be sure to understand the rules and regulations that lenders must adhere to in order to protect yourself and your home.

By: Marketing Tide

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