How to avoid foreclosure.

“Modified loans” switch variable rates that soon become impossible to fixed rates that borrowers can afford, allowing them to save their homes. As lenders get faced with expensive foreclosures (they can lose $30,000 to $80,000 when they foreclose), more and more of them are turning to modified loans.

The nation’s largest mortage lender, Countrywide, reports that it will modify more than 25,000 loans this year to keep them out of foreclosure. It claims to have provided other services, such as extended payment plans and refinancing to another 35,000 borrowers.

Countrywide’s action was prompted by a doubling of loans in pending foreclosure, but whatever the reason, it is good news for borrowers. If you have a mortgage with Countrywide that is in danger of foreclosure, now is the time to contact them.

If your loan is with another lender, you should talk to them about modification. Moody’s Investor’s Services told the Wall Street Journal that lenders have “recently” begun to modify more loans.

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