Because of the continued increase in the number of foreclosure filings in Colorado, there were many changes made and implemented this year. The new Colorado Foreclosure Law gives a longer period of time for the homeowners in foreclosure to look for a foreclosure solution.

The new law resulted in a slowdown in the rising foreclosure figures but it did not stop the increase. Statistics show that despite the implementation of the new law, foreclosure rates for the first half of 2008 still increased by 16 percent all over Colorado. Without the new law, it could be even higher.

The new law is good news only for those who found a long-term solution to their mortgage problems. For most of them, this long-term solution comes in the form of loan modification.

Loan modification works by changing the loan terms on the same loan that the homeowner currently has. The changes in the loan terms are made in order for the loan to be more affordable. This could be done by reducing the interest rate, lowering the principal amount, extending the loan period and spreading out the payments.

This is what the Colorado homeowners need. By making the mortgage payment lower than what the homeowners currently have, the loan is made affordable. Whatever the homeowner can afford today is what he is paying for, securing steady monthly payments. Being able to pay on time is the most effective way to avoid foreclosure.

Colorado homeowners have to be aware of this option that they have if they want to save their homes. Aside from being a permanent solution, loan modification does not only benefit the homeowner. Loan modification also benefits the lender, the housing industry, the government, and the economy. This is because the objective is to enable the borrower to pay for what he can afford instead of giving him more debt or using the taxpayers’ money to pay for those debts.