There are a lot of different ways to modify a mortgage. Here are a few:
Delinquent Payments | Repay over a fixed period (e.g., 6 months, 12 months) |
Accrue to principal, payable at balloon | |
Forgive the delinquent payments | |
Late Charges | Repay over a fixed period (e.g., 6 months, 12 months) |
Accrue to principal, payable at balloon | |
Forgive the late charges | |
Amortization | Waive amortization (i.e., interest only) for a period |
Recast loan over remaining term or amortization period after delinquent payments/and/or late charges are accrued or after an interest only or reduced payment rate period | |
Interest Rate/Payment Rate | Reduce payment rate for a period, continue to accrue at note interest rate |
Reduce interest rate for a period | |
Reduce payment and/or interest rate, capture all or a portion of net cash flow on an income property | |
Principal | Forgive a portion of the principal balance |
Bifurcate loan – reduce the principal balance on a first lien, the reduction amount becomes a subordinate lien due on sale or default (subordinate piece may or may not accrue interest or require payments) |
These options can be used in various combinations, so there are quite a few possibilities.
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