| If you are one of the many homeowners worried | | | | modifications are a decrease in the interest rate, |
| about making your mortgage payments or have | | | | a change from a variable rate to a fixed rate, and |
| already missed a few, you could qualify for a loan | | | | an extension in the term, stretching payments |
| modification. California, a state that has seen a | | | | out over a longer period of time so that they are |
| drastic increase in foreclosures and boasts | | | | smaller. Some banks will even roll the principal of |
| neighborhoods of deserted houses has made it a | | | | missed payments into the loan, or add these |
| law. Civil code 2923.6 was enacted in California in | | | | payments to the end of the loan. Under federal |
| July of 2008. This law requires lenders to offer | | | | regulations, your loan payment cannot exceed |
| those borrowers who are facing or in the midst | | | | 31% of your gross monthly income. |
| of financial crisis the opportunity to modify their | | | | California's move on the state level to mandate |
| home loans in the hope of decreasing the alarming | | | | loan modifications for qualified lenders is |
| number of home foreclosures. | | | | revolutionary. This state has been hit hard by the |
| You do not already have to be in foreclosure to | | | | foreclosure crisis and entire neighborhoods of |
| qualify for a loan modification. Actually, early action | | | | lovely homes sit vacant and crumbling. In an |
| will save you and the bank a significant amount of | | | | effort to keep people in their homes, or return |
| money. If you feel that you are losing your grip | | | | them to their homes, California enacted this law. |
| on your ability to make your monthly payments, | | | | Since its inception, the number of people being |
| contact your lender and request a loan | | | | forced from their homes has decreased |
| modification. If you purchased your home in | | | | drastically. |
| California between January 1, 2003 and December | | | | Loan modifications are a win-win situation. The |
| 31, 2008 then the law says you must be offered | | | | banks do not rely on tax payer money to bail |
| the chance to modify your loan. | | | | them out; the modified loans keep the interest |
| What exactly is a loan modification? Well, unlike a | | | | payments coming in and homeowners do lose |
| refinance, which is a completely new loan with | | | | everything they had in a home foreclosure, they |
| new terms and conditions that requires extensive | | | | stay in their homes and have a better chance of |
| pre-approval, a loan modification makes changes | | | | surviving this financial crisis. Hopefully other state |
| to your existing loan. The most common | | | | will follow suit and enact these kinds of laws. |