Many homeowners across California are opting for loan modification to prevent home foreclosures. California witnesses around 80,000 to 90,000 foreclosure filings every month. According to new California law, a lender has to place comprehensive loan modification program that meets certain standards or has to give 90 days advance notice to homeowners before foreclosing.

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The loan modification program offered by the lender is required by law to meet particular criteria, including reducing the homeowner’s payment per month to less than 38% of their total annual income. Other options to prevent home foreclosures include extending the length of the loan or reducing interest rates for up to five years. The foreclosure process is exceedingly expensive for lenders. The average Californian home foreclosure will cost an approximate $60,000, with at least $4,000 or more from legal fees alone. Realistically, the complete total of legal fees with amount to nearly 25% of the loan.

Hence, many banks in California are discouraging home foreclosures and are opting for loan modification programs. The need to accept home loan modification programs is being recognized by many banks, as most of them already have huge number of properties in foreclosures.

Now, the banks are giving the homeowners a much better option of changing the loan’s terms as opposed to foreclosure. With the state of today’s economy, loan modification seems to be possibly the only way for homeowners to avoid losing their properties.

With loan modification, it is possible to reduce the monthly payment at affordable levels. Families facing hardship and not having control over their finances are highly eligible for loan modification program.

Applying for home loan modification to prevent foreclosure has a specific procedure. This procedure can take a long time, probably several months before the homeowner receives any positive reply.

Homeowners have to write application letter describing how and why they fell in financial difficulties and status of their financial activities. It is important for homeowner to keep a track of such application by contacting the lender or loan modification company regularly.

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