Homeowners who have encountered financial difficulties may struggle to pay their ongoing expenses, including mortgage payments. Those who have defaulted on their mortgage after missing one or more payments may have been contacted by their bank, or they may have been notified that a foreclosure will occur if they do not make up the missed payments. In some cases, bankruptcy may be the best way to respond to a foreclosure notice. Bankruptcy may provide a homeowner with options to address outstanding debts and ensure that he or she will continue making mortgage payments. However, loan modifications may be another option that will allow a homeowner to make up missed payments and to continue making affordable payments in the future.
Mortgage Loan Modifications
The terms of a mortgage are not set in stone, and a bank or lender may agree to update these terms. In fact, it is often in a lender’s best interests to do so, since the foreclosure process is likely to result in financial losses, and lenders will often prefer to make arrangements that will allow them to continue receiving regular payments.
Homeowners may have multiple options for modifying a mortgage loan in a way that will reduce their payments to an amount that they will be able to afford. These options include:
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