One of my friends from college lately 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 recently; so many homeowners could no longer afford their loan payments. One of my friend’s customers was puzzled seeking to decide between a loan modification and a short sale. He did not know the difference, so my friend had to update 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 desired to sell his property, then he needed to look for short sale help. A short sale would assist him to protect his credit score and deal the house. The client would be best attended if he engaged an attorney to help him with the short sale proceedings. The bank would move to meet with the lawyer and negotiate a final sale cost. Once this measure is finished and the client signed all of the paperwork, the client is cleared 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 purchaser for the home, but the previous owner faces no more problems with their prior home.

If the customer wanted to hold on to his home, then he would need to look for a loan modification. A loan modification would modify the loan to suit the payment capabilities of the borrower. In this case, the loan could be prolonged to a forty-year loan, or the loan installments could be decreased by the bank. There are variable ways for the bank to do this. One recommendation by our President has been that banks cut monthly mortgage payments to 30 percent of a household’s monthly income. This makes the loan payments more practical, so it is easier for the client to pay off his mortgage. Through the help of my friend at the bank, his first customer was able to implement a loan modification and he was able to remain in his home. He did look into short sale help, but the loan modification presented a cleaner end result.