Are There Any Incentives For The Lender To Modify My Mortgage?

The incentive to modify a mortgage is obvious to the homeowner; a lower payment. But is there any benefit for the lender in this situation? It is always good to know what each party stands to gain when entering into an agreement, and when your money and home are at stake having that knowledge is all the more important. It is true that the homeowner probably gets the biggest benefit from a mortgage loan modification, they get to keep their house. But that does not mean the bank is not also incentivized or does not realize any upside to agreeing to the modification.

Some things that go in the plus column for a lender when your mortgage is modified are:

•         The cost of litigation, to foreclose, is avoided. These savings can be passed on to you, in the form of a lower interest rate or some other term included in your modification. This does not mean you will get cash in hand when you modify your home loan, but there is a financial savings for both sides.

•         Fewer loans are reported as charged off on the bank’s books. It is easy to forget that banks are anything more than a large corporate entity without a human element, but in truth these companies are staffed by people who need jobs just like the rest of us, and when the overall financial health of a lending institution is in peril, jobs can be lost. The lower the reported loss, the more likely the bank is to thrive and contribute to the local community by offering employment.

•         Rather than taking back the home, the bank gets paid. There is a cost associated with remarketing a home that has gone back to the bank, and most banks would much prefer to be paid than to act as a realtor.

Even though there are incentives for banks to offer and approve loan modifications, not all requests are granted. If your bank has turned you down for a mortgage loan modification, let us take a second shot at it for you. If you are still denied, we can offer alternatives such as bankruptcy or other debt management programs.

For more information about how to modify your mortgage payment, call us today or reach us online at www.law-ri.com. We offer appointments at multiple locations for your convenience and can schedule a time to visit with you soon.