A loan modification can result in an initial drop in your credit score, but at the same time, it’s going to have a far less negative impact than a foreclosure, bankruptcy or a string of late payments. However, the effect will be less and of shorter duration than a string of missed payments or a foreclosure would have.

How much does loan modification affect credit?

Technically, a loan modification should not have any negative impact on your credit score. That’s because you and the lender have agreed to new terms for paying off your loan, so if you continue to meet those terms, there shouldn’t be anything negative to report.

Can I refinance if I have a loan modification?

Having modified a loan does not disqualify a borrower from being able to refinance. If a person meets all lender requirements and would be able to refinance on their original loan, then the person will most likely be able to refinance on their modified loan.

What are the requirements for a loan modification?

Some traditional lenders have their own loan modification programs. A mortgage loan modification application will require the details of a borrower’s financial information, the mortgage information, and the specifics of the hardship situation. Each program will have its own qualifications and requirements.

What kind of company does a mortgage modification?

Settlement companies are for-profit entities that work on behalf of borrowers to reduce or alleviate debt by settling with their creditors. Mortgage modification lawyers specialize in negotiating for the owners of mortgages that are in default and threatened with foreclosure. Federal government assistance also is available to some borrowers.

Can a lawyer help you with a mortgage modification?

Many of the mortgage companies are behind in processing loan modification requests and in the meantime the foreclosure process continues. An attorney can advise you on the best way to structure your loan modification for long term success while also insuring your rights under the law are protected.

What’s the difference between a loan modification and a forbearance?

In such situations, the lender has concluded that a loan modification will be less costly to the business than a foreclosure or a charge-off of the debt. A loan modification agreement is not the same as a forbearance agreement. A forbearance agreement provides short-term relief for a borrower with a temporary financial problem.