How do loan modifications work?
That is the number one question nowadays. With everyone and there brother in trouble financially because of the economy, loan modifications start to become more and more appealing.
Loan modifications work like this: Fred from Minnesota lost his job, he was a good guy who made good financial decisions for the most part, he certainly did not do anything irresponsible. However because he is getting barely any income each month, he has fallen behind on his mortgage payments and is facing foreclosure.
Fred wants to avoid foreclosure and hears about loan modifications.
He does his research, and finds out that a loan modification is perfect for him!
Fred then talks with his lender [usually a bank] and finds a loan modification attorney to represent him.
After 90 or so days of hard work and negotiation by everyone involved, a loan modification on the mortgage is finalized! Fred is paying roughly 50% of what he used to each month until he gets a job and is able to make his normal monthly payments again.