How to Learn Loan Modification

Learning about loan modification could help you become more knowledgeable about ways to avoid foreclosure. Loan modification changes the terms of your mortgage to make the payments more affordable. According to Zillow.com, loan modification is also known as mortgage modification, a workout plan, or a mortgage restructuring. The goal of loan modification, according to Zillow, is to help people who are working through a financial hardship and are struggling to pay their mortgages. Lenders agree to help by making permanent changes to the loan, including altering the interest rate and the amount of the monthly payments.

Instructions

1

Learn the basics of loan modification by attending free local workshops. For example, a special workshop for loan modification was being planned for Phoenix, Arizona, for 2011 by the Neighborhood Assistance Corporation, a nonprofit counseling agency certified by the U.S. Department of Housing and Urban Development. Attendees were being promised free, same-day service on reducing the interest rates on their loans to as little as two percent--and possibly even a reduction of the principal through loan modification negotiations with lenders. Find similar workshops in your area by checking the Foreclosure Prevention Workshops page on the FreddieMac website.

2

Visit one-on-one with a nonprofit credit counselor to learn about loan modification if there isn't a workshop scheduled for your area. Find a counselor in your area by searching the website for the U.S. Department of Housing and Urban Development. Take a copy of your mortgage statement to the meeting and ask the counselor to determine if you would be a good candidate for a modification program. Ask specific questions about loan modification, including the length of the process, qualifying procedures and success rates.

3

Ask follow up questions, if necessary, by contacting your mortgage company. Don't worry about your mortgage company becoming alarmed by your questions. Mortgage companies would rather hear from you earlier rather than later if you're having financial problems. If you're just seeking general information about loan modification, then tell that to the loan officer as you continue to learn.