subject: Preventing Foreclosure: Loan Modification Programs In California [print this page] Many homeowners across California are opting for loan modification to prevent home foreclosures. California witnesses around 80,000 to 90,000 foreclosure filings every month. According to new California law, a lender has to place comprehensive loan modification program that meets certain standards or has to give 90 days advance notice to homeowners before foreclosing.
Additional details include the following:
The lender's loan modification program needs to fulfill certain criteria that includes reduction of monthly payments below homeowner's 38% income. In addition, extending terms of loans or reduced interest rates for next five years are other possibilities that can be used by the homeowners to prevent home foreclosures. Home foreclosure is a costly affair for bankers. A typical foreclosure in California will cost around $60,000 with $4000 alone. In fact, the legal fees cost around 25% of the entire loan amount.
For these costly reasons, California's banks are seeking to avoid the foreclosure process and help people adjust their loans. The large amount of properties which are under foreclosure has brought the banks to realize that loan modifications need to be made to remain in business.
Now, the banks are giving the homeowners a much better option of changing the loan's terms as opposed to foreclosure. With the state of today's economy, loan modification seems to be possibly the only way for homeowners to avoid losing their properties.
Loan modification programs make it possible for homeowners to afford their monthly payments. Families that are struggling to pay their bills and are suffering serious financial distress are more than likely eligible for these programs.
As with everything related to a home loan, there is a detailed process one must use to apply for modification. With the paperwork and authorities involved, the application process can often take months to complete.
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.
