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Loan Modification Business
Mark Karavan, Knowledge Level: All Levels, Keywords: loan modification business
Is there really such a thing? Well, it is certainly likely to assume so, just considering basic practicality. If you are a homeowner with a mortgage that you are willing to refinance, two things are automatically assumed: you have already qualified for a mortgage, and the mortgage that you qualified for is substantially higher than the one that you are applying for. This makes the refinance process easy for the lender; if they know that the borrower has already been issued a loan at a certain rate, it is even more likely that they will be able to pay off one at a smaller rate.
Thus, there is a rush to the loan modification business. In fact, this is probably one of the biggest stabilizing mechanisms of falling interest rates: supply and demand dictate that interest rates can only go down so far before a large number of borrowers start bidding the rate back up to equilibrium.
The problem with the loan modification business is that if follows precisely the same rules as primary lenders; it must adhere to sound lending practices, even in exceptionally heated and pressured markets. Refinancing is no less prone to financial meltdown than any other kind of mortgage businesses, so it is a sobering thought to remember that a œrefi boom” can result in a œrefi bust” just as easily.
. Article on loan modification business by Mark Karavan
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