As the news of record foreclosures rates continues to bombard us what can someone do to avoid becoming one of those statistics? Thousands of homeowners are struggling to make growing payments on adjustable rate mortgages. One possible solution is loan modification. Loan modification allows borrowers to renegotiate the terms of their current mortgage rather than refinancing. In many cases it is difficult, if not impossible, for owners who are having trouble making their payments to refinance due to declining home prices in many markets. Banks are reluctant to loan homeowners more than their home is worth, which is often what they own. 

 

Loan modification is one of the tools that the U.S. government is using to help combat the mortgage crisis. There are agencies in place to act as a middleman between borrowers and loan companies, which can be very helpful in the complicated process. Critics of the process complain that wait time for help is too long and paperwork is too complicated and cumbersome. Sorting through bureaucratic red tape can cost homeowners precious time as their payments climb higher and higher. Similar obstacles can be encountered when homeowners try to do a loan modification themselves, by dealing directly through their mortgage provider. Even taking the obstacles and difficulties into account loan modification when completed successfully can be the answer to avoiding foreclosure.