Why is Loan Modification Underwriting Process Important for Your Business?
Loan modification is sought by borrowers when they are unable to repay their mortgage and are faced with the threat of foreclosure. Many borrowers struggle with the high interest rates and their only chance of saving their home from being confiscated is by choosing loan modification.
Through loan modification, a borrower can get reduced principal balance, lower interest rates or extension on their loan term. It is evident that loan modification is extremely beneficial for the borrower, especially when they are at the cusp of losing their home. However, is it really constructive for the borrower as well? Let us discuss how loan modification helps lenders.
It Is a Win-Win Situation
Loan modification would not even be an option offered by a lender if it didn’t help them in some way. When lenders give their borrowers an option to modify their loans, it helps them save money, the money that would otherwise be lost due to borrower’s inability to pay. However, through modification, the banks hope to at least recover the principal amount by offering borrowers to pay their loan at new interest rates. At the end of it, loan modification helps borrowers keep their home and lenders get paid monthly.
What Loan Modification Can Mean for your Business
The main objective of loan modification is to ensure that the homeowner stays in his home and the lender receives his monthly payments consistently. This objective is achieved by altering the mortgage terms so that they are sustainable by the borrower.
It is beneficial for not just the borrower, but also the lender who wants to avoid going through foreclosure.
Here is how a lender benefits from modifying the borrower’s loan terms.
- Reduced Interest Rates: Lenders usually agree to reduce the interest rates on a mortgage as a temporary solution to help the borrower through monetary crunch. If the homeowner wants to permanently reduce the interest rate, then it can be achieved by getting the loan refinanced. The lender benefits by reducing the rate of interest for a limited period and then add it back at the end of the mortgage. The reduced interest is recovered when the loan matures or when the property is sold.
- Increased Loan Terms: another way to reduce monthly payments on mortgage is to extend the loan term. The borrowers can enjoy the savings, while the lender gets paid for a longer tenure, preventing foreclosure at the same time.
- It is better than foreclosure: many lenders prefer loan modification over foreclosure. While the lender may have to wait a while before they can foreclose a property, loan modification can take as little as 30-90 days for the entire process. Moreover, foreclosure is an expensive process that attracts additional fees.
Choosing an expert loan modification partner can do make things a lot easy going for lenders. With over 10 years of experience in mortgage processing outsourcing services, Expert Mortgage Assistance excels in providing excellent underwriting process. You can leverage it to improve the quality of loan modifications, and eliminate any chances of costly defaults. If you want to partner with the best loan modification service providers in the market, then call us today.