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What Are The Differences Between Federal Loan Modification Programs And Consumer Banking Modification Programs

What Are The Differences Between Federal Loan Modification Programs And Consumer Banking Modification Programs

If you are having trouble paying off your mortgage, you may want to consider a home loan modification program. Home loan modification can help you get better terms on your mortgage, including a better payment schedule, lower rates, reduction in principal or even forbearance while you get your finances in order.

When looking at loan modification options, you mainly have two choices:

Depending on what sort of deal and experience you want, one of these two choices will be better for you. Read on and consult with your loan modification attorney for advice tailored to your specific needs and situation. Loan modification is a common thing in the wake of the housing market crash, and because home prices are still falling in many places, it remains a very real issue.

The Main Difference

The main difference between consumer banking loan modification and federal loan modification is whether the federal government is involved or not. No matter what happens, your lender, often a consumer banking establishment, will need to be involved in the loan modification process. The Home Affordable Modification Program is simply designed to streamline a bank's ability to modify your loan if you meet certain more stringent criteria. It adds an extra level of oomph to your attempt to modify your loan, and if you meet the right criteria, the bank is obligated by federal authority to modify your mortgage for you.

On the other hand, if you are just going through your consumer bank, your goal will not only be to prove that you meet the bank's criteria for a loan modification, which are similar but not quite as strict. You will need to prove, through adequate documentation, that you are a worth the bank's time and money to modify your loan. The bank will need to decide whether to foreclose on your home and lose the money it could have made by keeping you in a mortgage or whether you will continue to be a paying customer. Your job will be to convince it that you are more valuable as a paying customer.

Additionally, you may be able to come to an agreement more tailored to your specific situation if you do so through a consumer banking establishment. Options such as mortgage forbearance, in which you agree with the bank to stop payments for several months while you get your finances in order and then begin payments again when you are able to do so, are not available through federal loan modification.

List Of Qualities For Federal And Consumer Loan Modification Programs


  • More stringent requirements
  • Greater likelihood of getting a loan modification if you meet requirements
  • Extra level of bureaucracy
  • May take slightly longer
  • Fewer options for modification
  • Fewer eligibility requirements
  • Need to convince the bank that you are financially worth its while
  • May require more specialized paperwork
  • More options for modification
  • Often requires the assistance of a loan modification attorney

Whether you choose a federal program or a consumer program for loan modification, an attorney can advise you and help you gather and fill out all the proper paperwork. Contact a loan modification lawyer today!