Many lenders are using the term “Modify” as a softer term for refinancing. Another new term that is being used is reamortize which means that new payments are being based on a new time period. For example a 30 year loan’s new payments are based on the remaining balance for a shorter period of time such as 15 years instead of the original 30 years.
Recasting has advantages over refinancing. In this case, the borrower is dealing with the same lender, so there will be no closing costs, and the lender’s fee (the $800) is not large. There is no downside according to a mortgage broker as long as the lender is not extending the term or increasing the balance. Recasting of loans is being generally done by portfolio lenders, lenders who held on to the loan instead of selling it to an agency like Fannie Mae or Freddie Mac.
Read the story on how local lenders are recasting, modifying or remortizing mortgage loans by CLICKING HERE.