A loan modification permanently changes the original terms of a mortgage. Most loan modifications reduce monthly payments, making the mortgage more affordable for the homeowner and enabling them to stay in the home . A loan modification may reduce your interest rate, spread your payments out over a longer period of time, and even reduce the amount you owe.
If you are suffering a temporary hardship, a lender may agree not to foreclose and to accept reduced or no payments for a period of time. After the forbearance period, you will agree to a repayment plan or a loan modification to catch up on the missed payments.
You have the right to reinstate or bring your loan current up to five days before a nonjudicial foreclosure sale by paying only the past due amounts, including any fees or charges your lender assessed. You may have a contractual right to reinstate your loan before judgment is entered in a judicial foreclosure.
You may be able to stop or avoid a foreclosure by filing bankruptcy. Bankruptcy can eliminate other debts so you can focus on your mortgage and will discharge your personal liability for the loan even if you keep the property. In a Chapter 13, you may be able to pay any past due amounts over time and even “strip off” an unsecured junior mortgage.