Rate modification refers to a legal process in which a lender modifies the interest rate terms for a particular loan. This is usually in response to the borrower’s long term inability to service the loan on account of various factors. One of the other changes that can be made in addition to rate modification is extension of the length of the term of the loan.
The process of rate modification is usually enshrined in both state and federal laws. This means that when an individual is interested in having a loan interest rate modified, they would need to use the law as their guide in doing so.
In the case of a loan, the interest loan modification is usually initiated by the borrower. This is usually in the form of writing a letter requesting the lender to modify the rate, usually downwards. This application costs some money depending on the lender’s terms. The client’s applicant’s credit rating and a financial appraisal are also necessary for the lender to decide to change the interest rate. A verification of one’s income may also be requested.
When all criteria are met and the lender agrees to the rate modification, it is usually necessary to draw up a fresh agreement regarding this. It is the responsibility of the loan applicant to go through the new agreement and understand it before signing it. Typically, having legal counsel during the process helps this along. Ishimbayev Law Firm has well-placed experience in handling all forms of rate changes, and can easily provide advice and other services regarding the same.