The advantage of a loan modification is that it can make an unaffordable loan affordable.

The disadvantage of a loan modification is that, based on our observations, most of the time the homeowner pursues these, they are ultimately not approved, or almost certainly not approved in a way in which it is helpful enough for the homeowner to stay in the home. In other words, most of the time it does not work and the result is foreclosure. We call this the “loan modification merry-go round”.

In a typical scenario, a homeowner will hire an expert to negotiate the modification. Please carefully research any company that offers this service for a fee. Usually the homeowner will be told to stop making payments during the negotiation. At this point the lender will tell the homeowner that a modification is being considered. Unfortunately, based on our observations, most of the time the modification is ultimately denied (just before a foreclosure) and the homeowner is not able to make up all of the late payments and significant interest, penalties, and legal fees, and thus the result is a foreclosure.