Industry Terminology: Loan Modification
April 23, 2020
During this novel coronavirus (“COVID-19”) pandemic, the NewRez family of companies is committed to helping our customers, including offering alternate payment programs as allowed by loan owners/investors. Things are changing quickly, and we recognize the growing number of customers whose employment statuses have changed or are in flux. As a result, we want to help our customers understand some of the mortgage-related terminology currently appearing in media, press briefings, and online.
What is Loan Modification?
Simply put, loan modification refers to any change or alteration that a lender makes to a loan. A loan modification could include a reduction in the interest rate, an increase in the length of repayment, or changing to a different type of loan entirely. It is typically explored when the borrower is unable to repay their mortgage loan according to the original terms because of financial hardships. Borrowers may be eligible for loan modification options at the conclusion of a forbearance period or other alternate payment program.
The agency or investor that owns your particular loan will determine the qualifications and process for obtaining a loan modification. For example, Fannie Mae borrowers are offered loan modification through a program called Flex Modification while the Federal Housing Administration offers their borrowers loan modification via the agency’s HAMP program.
In order to determine if you may be eligible for loan modification either now or when your forbearance expires, please sign in to your account and contact your servicing team.
We will continue to monitor COVID-19 and evaluate additional measures that may be available to support our customers and communities. Thank you for being part of the NewRez family.