Posted: Mon Oct 05, 2009 4:42 pm Post subject: Do I have to be in default to get a modification?
My wife and I are trying to work with Wells Fargo on a loan modification process. We are current on our payments and have never been late or missed a payment, but my wife lost her job over 6 months ago and still is out of work and I had a sizable pay-cut. Wells Fargo is telling us we have to go into default on the loan before we can get a modification. They want to put the loan on a hold where we do not make any payments for 6 months then we have to pay a balloon payment. They said this would cause us to be in default. We do not want to suffer the credit damage that would cause, we have great credit scores. But they said thats the only way we can get a modification. Is this true?
The home value is $704,500 and the balance we owe is $582,490 with a APR of 6.75%. A refinance does not seem the way to go because of the 2% rule of thumb, I doubt we could get a refinance that is under 4.75%, 2% below what we pay now, considering a loan of $582k is a jumbo loan. _________________ Need help choosing the right loan? Get free consultation from community lenders/consultant
As far as I know, it is not mandatory for a person to be in default in order to get a loan modification. You can get a loan modification even if you are on the verge of default. It is true that if you default on your loan payments, it would have negative affect on your credit score and lower it by some points. In my opinion, try if you can negotiate with your lender and get the loan modification.
Thanks
daviddm Guest
Posted: Tue Oct 06, 2009 9:44 am Post subject: Going default
I did try to talk to them , and they said I have to go default, I did not have a choice. Is there something I should tell them to get them to corporate? Is their a law against t=what they are doing or anything?
Loan modication is for those who can not afford the monthly loan payment. this situation may arise
Decrease in Salary
Increase in other Monthly expenses
Increase in mortage payments.
you can explain your diiifculties to them. They will check whether revised plan is affordable to you or not.
Daviddm Guest
Posted: Tue Oct 06, 2009 1:55 pm Post subject: Hardship Letter
I already submitted a hardship letter and the financial worksheet. When it was all reviewed they wanted us to enter a Forbearance Agreement in which we do not make payments for 6 months (causing us to enter into default) afterword we would have to make a balloon payment of $21,470, which we could not make anyway. Then and only then they said they would consider a modification.
What I do not understand is why I have to go into default before they can do a modification? They said they know we could not make the balloon payment so why make us go through the Forbearance and mess up our credit? I do not understand why they can't just modify the loan and we keep making payments? It makes no financial difference to them since we end up in the same place, seems like they just want to screw up our credit.
It can be a requirement of your lender for a loan modification. However, it is not mandatory for a borrower to be delinquent on his/her loan payment in order to get a loan modification. In my opinion, it would be better if you could contact your lender and check out if he can give you a loan modification without the forbearance. _________________ Procrastination is the enemy of your financial sucess
I can talk from my experience wiht my mortgage company I had to actually default on my mortgage in order to get any kind of response. I have been trying to modify my loan now for over 6 months to no avail I sometimes wonder what the guidelines are and why are they not stated somewhere?
Rules may differ from lender to lender. Though it's not mandatory for the borrower to default on their mortgage dues in order to get a loan modification, some lenders insist on it.
it'll probably get them to act more quickly, though "quick" may be an obsolete word in the world of mortgage modifications. _________________ George M. Akerley
Loan Consultant
860-221-5044
judgemental Guest
Posted: Thu Nov 05, 2009 11:32 am Post subject:
I used to work for a modification company and we modified MANY loans that were not in default, MANY that were actually current and had not been late and YES, even with Wells Fargo. I had worked with many who had tried with their lender only to be turned down and then our negotiator was able to work a modification
Posted: Mon Nov 16, 2009 11:27 pm Post subject: going default
David, we too needed to mod our loan a few months ago when our income was reduced for loss of my wife's job but our bank didn't do anything even after we turned in a hardship letter until after we started missing a few mortgage paymts. Now they started the process for the loan. Apparently they don't want to see another home foreclosed.
jameshogg
