Foreclosure Versus Loan Modification

I introduced the Helping Families Save Their Homes In Bankruptcy Act of 2009 to give courts the power to modify mortgages to bring them in line with underlying home values. For families in distress, this is a much-needed reform. And considering the realistic alternatives, it is fair to all concerned.

Foreclosure Versus Loan Modification – Which Choice Is Best for You?

A loan modification simply means that you change the existing terms of your mortgage loan agreement. Your goal is to make a lower monthly payment than what you originally agreed to, so that you can keep your house.

A foreclosure, on the other hand, means that if you as borrower cannot keep up with your monthly payments, the lending bank will take back your property. Then, probably, the bank will put it up for auction, then use whatever proceeds result to cover the shortfall on the balance of its loan to you. Of course, in this scenario, you lose your property.

If you talk to your agent and want to explore both these options they should be able to help you understand the uniqueness of your case and advise you on what would work best in your case and more importantly what would be cheaper. If things are bad or you own a home where your agent feels the loan modification will only work against you as it would still leave you at a very disturbing pace, he might sometimes explore the option of foreclosure – the only catch being that you might have to part with your home. So, though these are two different options that you need to choose from, they both have their plusses and minuses. So, if you compare the cost of loan modification versus foreclosure, it is similar to choosing between the lesser of the two evils!

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