Loan modification is not a new program between lenders and borrowers, the term is sometimes called loan restructuring or loan workout. The purpose is the same, which is adjusting loan details according to what will be agreed between lender and borrower. However, it should be favorable to both parties.

However, under the new loan modification, it aims the reduction of monthly amortization to at least 31% from the family's gross income. Though, in reality, it should be 38% from the point of view of the lender. The remaining 7% will be subsidized by the government; this is where lenders will gain from a program. The government actually offers incentives to lenders that allow loan modification for eligible homeowners.

The incentives will work to the advantage lenders because for every successful loan modification, they get $1000. And the same amount will be added for three years more, if a homeowner continues to pay regularly within that period. The said incentives will come from the government's money, so it's sure revenue for lenders.

Besides this obvious financial gain, mortgage lenders would rather prefer that homeowners mortgage property is modified than foreclose it. The philosophy behind is basic, foreclosed homes will be an idle asset and a liability at the same time. It's a liability because it devaluates naturally. So a loan modification to its homeowners is a much better option for lenders, profit wise.

This fact may not be known to homeowners at this point of time. So it is wise that homeowners seek legal counseling to get these facts right. Besides, there is actually a limitation to the new loan modification scheme that homeowners must know. For instance, a mortgaged luxury home is not eligible to avail a loan modification.

Mortgage concern counseling can also be availed from the Department of Housing and Urban Development (HUD), the service is free. Likewise, homeowners can also see private lawyers who specialized with mortgaged properties. There will be fees to pay, but they are assured of favorable results. Homeowners should grab this chance to fix a mortgage problem; likely lender won't turn down a proposal for loan modification.

In the new loan modification lenders have double chances of gaining than when they foreclose a property. While homeowners, on the other hand, is given another chance to keep their homes.