Loan Modification Agreement

by admin on February 23, 2009

A loan modification agreement is recorded with your borrower. The borrower executes two original copies of the loan modification agreements. One is kept as a record and filed and the other one is kept in the filing records of the land department. This instrument is filed and kept for record purposes.

A loan modification agreement is entered into between the lender and the borrower on a specific date. This agreement includes the name of the borrower and the lender, their respective addresses, the amount or principal amount secured through a Security Deed. It also states the jurisidction under which they fall. The instrument also covers the details of the property and the address of the land etc.

Based on the terms and conditons, both the borrower and lender enter into an agreement, whereby the borrower agrees to the terms and conditions stipulated in the agreement copy. The amount is also entered. The rate of interest at which the lender agrees to lend the loan, the period for which the loan is given, the other terms and conditions. The other clauses could also include excess interest which would be charged by the lender to the borrower in case the borrower goes into default.

Both the lender as well as borrower agree to certain agreements as per the Security instruments Act.

The clauses would normally include:

Present Balance amount : The amount is normally mentioned in the clause in US dollars.

Rate of Interest: The interest charged on the principal amount is mentioned in this clause. The interest is normally charged on the pending amount which has a specific rate of interest. The clause is typically very clear with respect to the rate of interest charged on the principal amount till the amount is cleared totally.

Monthly payments to be effected and Date of Maturity :

The borrower has to abide by the agreement which clearly states the monthly payments which have to be effected by him or her at a particular rate of interest which is decided by the lender. The borrower has to clear all the payments on the date of maturity of the loan.

Place where payment has to be effected: The agreement mentions the place where the payment has to be effected. The lender would decide the venue where they would want to take the payment.

Part Payments: This clause would enable a borrower to make postdated checks. These checks would be deposited every month by the lender on the due date. The lender would normally consider a reduction in the principal amount that the borrower owes. In case the borrower makes a partial payment, then there would not be any major changes in the due dates or instalment amount unless the lender agrees to the changes in writing.

Reblog this post [with Zemanta]

Leave a Comment

Previous post:

Next post: