A loan modification is a permanent change in one or more of the terms of a mortgage allowing the loan to be reinstated resulting in a lower payment that the borrower can afford. Basically if you are behind on your mortgage for quite some time, then more than likely you will qualify for a modification.
Loan modifications are not the same as debt consolidations, refinancing loans, or even forbearances. So if you see a service that promises you to do either one of these things as a form of modification, run the opposite way.
What loan modifications really do is stop foreclosure proceedings and instead reinstates the loans as they are being modified. You can also apply loan without proof of income from various online sources (also known as “darlehen ohne einkommensnachweis” in German language)
Modified mortgages may typically use an extended term method to provide for the repayment of the due and past due funds. The lower payments ensure that the borrower is repaying the lender. Foreclosure is avoided and since the housing market is slow and thus has made it difficult for banks to sell such properties and then recover any additional funds from the previous homeowners. Therefore, a home loan modification is a much more attractive solution for lenders today.
A modified loan also protects your credit rating as a borrower and it also helps lenders show less defaulting loans in their portfolio, which is very attractive to the investors when they consider viewing their portfolios. This is why a loan modification is great for you because you can save your credit and save your home all at one time.