One of my acquaintances from college recently moved to Chicago and found a job at a local bank in the loan section. One of his initial duties was to address a loan modification. Chicago had a prosperous real estate sector until recently; so numerous homeowners could no longer afford their loan payments. One of my friend’s customers was bound seeking to decide between a loan modification and a short sale. He did not know the difference, so my friend had to fill in his client about the differences. Before the client could make a decision, he had to determine if he wanted to stay in his home or if he wanted to sell his home.

If he desired to sell his home, then he needed to seek short sale help. A short sale would assist him to protect his credit score and sell the home. The client would be best helped if he hired an attorney to help him with the short sale proceedings. The bank would proceed to meet with the attorney and negotiate a final sale cost. Once this step is finished and the client signed all of the paperwork, the client is acquitted of the debt. They do not have to concern about any debt or the bank suing for the remaining funds on the mortgage. The bank will look for a buyer for the house, but the former owner fronts no more problems with their prior home.

If the customer preferred to keep his home, then he would need to seek out a loan modification. A loan modification would adjust the loan to suit the payment capabilities of the borrower. In this case, the loan could be extended to a forty-year loan, or the loan payments could be reduced by the bank. There are variable ways for the bank to accomplish this. One recommendation by our President has been that banks trim monthly mortgage payments to 30 percent of a family’s monthly income. This makes the loan payments more realistic, so it is simpler for the client to pay off his mortgage. Through the aid of my friend at the bank, his first customer was able to go through a loan modification and he was able to abide in his home. He did look into short sale help, but the loan modification offered a stronger end result.