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 manage a loan modification. Chicago had a booming real estate sphere until lately; so numerous homeowners could no longer afford their loan payments. One of my friend’s clients was stuck trying to decide between a loan modification and a short sale. He did not know the divergence, so my friend had to fill in his client about the differences. Before the client could make a conclusion, he had to settle if he wanted to stay in his home or if he wanted to sell his home.

If he wanted to sell his property, then he had to seek short sale help. A short sale would assist him to protect his credit score and deal the property. The client would be best helped if he engaged an attorney to help him with the short sale procedures. The bank would proceed to meet with the lawyer and negotiate a final sale cost. Once this step is finished and the client signed all of the paperwork, the client is absolved 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 search for a buyer for the property, but the previous owner fronts no more problems with their prior home.

If the client desired to keep his home, then he would need to look for a loan modification. A loan modification would adjust the loan to meet the payment capabilities of the borrower. In this case, the loan could be prolonged to a forty year loan, or the loan payments could be decreased by the bank. There are various ways for the bank to accomodate this. One recommendation by our President has been that banks trim monthly mortgage payments to 30 percent of a household’s monthly income. This makes the loan payments more realistic, so it is smoother for the client to pay off his mortgage. Through the assistance of my friend at the bank, his first client was able to accomplish a loan modification and he was able to remain in his home. He did look into short sale help, but the loan modification offered a cleaner end result.