Mortgage Modification Help: Can It Help You Avoid Foreclosure?

Are you nearing foreclosure? Trying to avoid losing your property on someone else’s terms? You’re not the only one. Whether because of job loss, or medical bills, or COVID-related hardships (or all three), some homeowners fall behind on payments and want to avoid foreclosure. Even if you’re still current, you may see a missed payment as a certainty within a few months.

You may be able to avoid foreclosure with a loan modification. While this process can be a bit arduous and isn’t a guarantee, for many homeowners it is their last chance at hanging on to their home. It’s usually worth exploring if you find yourself in trouble with on-time payments.

What is loan modification?

Not everyone will qualify for a loan modification. In order to be considered, you must be ineligible for a standard refinance, face a long-term hardship, and be several months behind already (or certain you will be soon). If approved, your loan modification renegotiates the terms of your original mortgage loan in order to make your monthly payment more affordable. This can include changes to your interest rate or the length of your loan.

In short, loan modification is a sort of last-ditch effort to keep a homeowner out of foreclosure territory. So, yes, it can help you avoid foreclosure. However, some people who apply for a loan modification still find themselves in a foreclosure process if they’re unable to get approved in time.

Pros and cons of modifying your home loan

Modifying a home loan sounds like a dream come true to a desperate homeowner, but there are pros and cons. Like any real estate transaction, you want to make sure you maximize the benefits and keep the risks low. Here are some things to keep in mind.


  • You can bring your loan current, and out of delinquency with the bank to avoid foreclosure.
  • You will be able to stay in your home and not have to forfeit any equity you may have built over the years.
  • You are likely to end up with a lower monthly payment so you can afford your payments in the future.
  • Single unit and multi-unit properties can both qualify for loan modification programs with many lenders.


  • You already have to be behind in payment to qualify for most modification programs, which hurts your credit.
  • Modifying your loan can further impact your credit for the worse.
  • Once you start the modification review process, your lender may not allow you to change course and do a short sale (or any sale) until the review process is complete.

Alternatives to loan modification

If you don’t want to enter foreclosure but can’t qualify for a loan modification, there is another option. You may also be able to avoid foreclosure by selling your home fast. As long as you have some equity in the property, you won’t have to deal with a short sale (in which the bank agrees to take less than the remainder of your mortgage) — this gives you more freedom in choosing a buyer. California Family Homebuyers rescues people all over Sacramento from losing their home to foreclosure. We buy homes with repair issues, older homes, and even properties that need a serious overhaul.

If you’re experiencing financial hardship, give us a call today! We may be able to make you an offer within a few days, and close within a week. Selling fast can often help you avoid foreclosure and a loan modification; you’ll walk away with some cash and won’t have additional dings on your credit report.

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