In order to prevent foreclosures, homeowners throughout California are attempting the loan modification process. The state of California deals with approximately 80,000 to 90,000 foreclosure filings per month. Recently, a new law passed stating that a lender is required to offer the homeowner a comprehensive loan modification program or give a 90 day notices before initiating the foreclosure process.
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The loan modification program offered by the lender is required by law to meet particular criteria, including reducing the homeowner's payment per month to less than 38% of their total annual income. Other options to prevent home foreclosures include extending the length of the loan or reducing interest rates for up to five years. The foreclosure process is exceedingly expensive for lenders. The average Californian home foreclosure will cost an approximate $60,000, with at least $4,000 or more from legal fees alone. Realistically, the complete total of legal fees with amount to nearly 25% of the loan.
Hence, many banks in California are discouraging home foreclosures and are opting for loan modification programs. The need to accept home loan modification programs is being recognized by many banks, as most of them already have huge number of properties in foreclosures.
Additionally, it is in a homeowner's best interest to do everything they can to prevent foreclosure and apply for a loan modification instead. Truthfully, considering our country's current economic situation, loan modifications are perhaps our best chance at effectively preventing more homes from going into foreclosure.
Loan modification programs allow the homeowner to deal with a more reasonable monthly payment. To be eligible for one of these programs, a homeowner may be in financial difficulties.
However, applying for a loan modification follows specific steps and procedures. Unfortunately, this process requires a great deal of time, up to several months before a decision is made regarding a homeowner's mortgage.
Homeowners have to write application letter describing how and why they fell in financial difficulties and status of their financial activities. It is important for homeowner to keep a track of such application by contacting the lender or loan modification company regularly.
Author Resource:
Anthony Flores is an expert in Loan Modification Processing , and an authority in commercial loan modification processing questions .Please contact us with any questions
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