Loan Modification or Bankruptcy to Avoid Foreclosure?

The recent foreclosure epidemic has caused millions of homeowners in the U.S. to scramble for more affordable mortgage terms. Whether it’s a rising variable rates, loss of income, loss of equity or simply a poor decision to borrow money, people need loan revisions and very few people are able to accomplish that with the traditional method of mortgage refinancing. Mortgage loan modifications occur when a mortgage lender agrees to modify terms in accordance with their borrowers request. Most loan modifications happen after a borrower requests a payment reduction and the loss and mitigation department of the lender agree to the terms. Loan modifications have become a critical tool employed to prevent foreclosures.

Bankruptcy is a legal action filed by a consumer who is unable to pay his or her monthly debt payments. Bankruptcy formally stops all civil proceedings against the debtor while in bankruptcy. According to BK law, lenders must suspend their legal actions and this includes foreclosures. However, the lender still has the option of filing for an exception from the automatic stay. If the relief is granted the lending company is authorized to proceed with the foreclosure action. Bankruptcies do not always prevent or delay foreclosure and it does not necessarily enable the homeowner to remain in possession of the home unless the pay the deficiency owed to the lending bank. However, in most cases a bankruptcy will delay the foreclosure.

There has never been a better time to be delinquent on your mortgage. The foreclosure epidemic has created tremendous leverage for homeowners, because lender do not need or want more homes. Liquidity has become a serious issue with banking institutions; therefore they are negotiating and offering home loan modifications with lower payments for homeowners.

Mortgage banker, Bryan Dornan is a respected entrepreneur who has published and copy-written many foreclosure news and real estate related articles online. Dornan suggests reading as much as you can because the market changes so quickly. Visit these websites for home loan relief tips: Loan Modification Outlet and Find Bankruptcy Lawyers.  Article Source: http://EzineArticles.com/?expert=Bryan_Dornan

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