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Mortgage loan modification: Keeps foreclosure away

If you're facing financial hardships and almost on the brink of foreclosure, then you can negotiate with your lender for a workout plan to avert foreclosure. You have few options available before you to avoid foreclosure. These options are deed in lieu, short sale, forbearance and of course loan modification.

What is a loan modification program?

Mortgage loan modification is a program where your lender agrees to reduce your mortgage rate, extend the loan term, change the type of the loan etc in order to lower down your monthly payments.

Are you eligible for mortgage modifications?

You may be eligible if:

  • You're at least 3 months delinquent on the loan.
  • You took out the loan more than 12 months ago.
  • You have stable income.
  • The property has not been sold at a sheriff's sale.
  • The property is in good physical condition.

What are the different loan modification programs?

There are a few modification programs which have their unique features. Here we briefly discuss about 2 most prevalent programs.

Treasury Loan Modification Program
This program has been designed by the Obama administration in association with the US Treasury. This is a very inclusive program in the sense that it is not only helping the homeowners currently in financial difficulties but also assisting the homeowners who have lost significant equity in their homes and who are foreseeing tough financial times ahead.

Federal Housing Finance Agency Loan Modification Program
This is the newest mortgage modification program offered by the Federal Housing Finance Agency (FHFA). FHFA serves as the supervisory regulator of Freddie Mac and Fannie Mae. This program is only applicable to the mortgages held by Freddie Mac and Fannie Mae.

When is loan modification right for you?

Loan modifications are right for you when:
  • You have experienced a long-term reduction in income.
  • Your monthly expenses have increased.
  • You don't have enough income to pay off mortgage dues.

What are the benefits of loan modification program?

This mortgage program alters the terms and conditions of a loan that has been agreed upon between you and your lender. Some of its benefits are listed below.

    1.    Averts foreclosure
With this you can avoid the severe negative consequences of foreclosure and short sale.

    2.    Restores credit score
With this you can protect your credit score. Foreclosure damages your score badly and it remains on your credit report for around 7 years.

    3.    Lowers principal balance
Principal balance is the amount of the loan amount (without interest) that has to be still repaid. Sometimes, be negotiating with the lender, you can lower down the remaining principal balance.

    4.    Reduces rate of interest
This mortgage program may help you lower down the rate on the loan. This in turn makes payments more affordable for you.

    5.    Extends the loan term
Loan modification may extend the term of the loan. With extension of the loan term, rate gets lowered. This actually helps you make payments easily.

    6.    Converts ARM to FRM & vice versa
This offers you the chance to convert an adjustable rate mortgage (ARM) to a fixed rate mortgage (FRM) and vice-versa. You may be willing to switch to the safety of making fixed payments offered by FRM from your existing ARM. Again, the rate on your existing FRM may be too high. In such case, you may want to convert FRM to ARM.

    7.    Waives off late charges
Your late charges may sometimes be waived off by your lender.

What should you remember at the time of loan modification?

While negotiating on a mortgage modification, you should keep in mind the following points:

  1. Check out your financial health: You need to review your finances carefully. Lender may ask a personal financial statement from you. You need to keep that ready. Your financial statement should contain a comprehensive list of all your expenses such as credit card bills, utility bills, food expenses and other financial obligations. You should estimate the average expenses on each item for the 3 months in order to better assess your financial health.

  2. Prepare a hardship letter: In order to apply for a loan modification, you need to prepare a hardship letter . The hardship letter should satisfactorily explain the reasons behind your inability to pay off the mortgage. It should also explain why you are looking for loan modification.

  3. Gather necessary documents: Before offering you a mortgage modification deal, lender asks for certain documents. You need to keep these documents ready. These documents include :
    • Your bank statements and pay-stubs of last 2 months
    • W-2 form of last 2 years in support of your annual wage and taxes
    • 1040 Form of last 2 years as a proof of annual income tax returns
    • Latest mortgage statements
    • Hardship letter
    • Current property tax statements, if available

  4. Intimate your lender about your position: It is wise to intimate your lender about your financial position. If you are unable to keep up with the mortgage payments, lender may offer you a loan modification program. But, for that you need to contact your lender.

  5. Complete the necessary paperwork: Before approving your loan modification appeal, lender sends a financial worksheet to you. You need to fill up that worksheet carefully and send it to the lender along with other necessary documents. After receiving all these, lender assesses your financial health and determines whether you can repay your mortgage after modification.

    What you need to show is that you are still able to repay your mortgage even if you are not able to meet your current monthly payments.

  6. Get a written agreement:   If the lender agrees to modify your loan, you should obtain a written confirmation from the lender. Mere verbal confirmation won't suffice .

  7. Follow the stop gap repayment arrangement: If you apply for loan modification program, lender can't offer it to you with immediate effect. It requires some time (maximum of 60 days) for the lender to make the offer. This time gap is required to check your financial statements, loan status and other documents. During this time, lender wants you to follow a stop gap repayment plan.
Not all the mortgages are ideally suited for modification. If a loan carries high rate in relation to the current market rate or if the homebuyer has a low loan-to-value (LTV) ratio, then it may be appropriate to modify a loan.

What are the outcomes of a mortgage modification?

  • You can keep up with mortgage payments.
  • You can convert your ARM into a fully amortized FRM.
  • The principal, interest, taxes and insurance (PITI), may be or may not be included in the current loan balance.
  • If the past dues are added, the modified principal balance amount may be more than 100% of the LTV of the original principal balance.
  • Modified loan balance may include administrative charges caused due to the cancellation of foreclosure.

How much time does loan modification take?

You have to wait several hours to file your loan modification appeal. When your turn comes, you have to present your case confidently. You should have all the relevant documents ready with you. This is not a very easy task.

You may have to wait for several weeks to get the final modification offer after your case gets registered. Your lender may tell you about your course of action in the meanwhile. You may be told by the lender to keep on making payments so as to qualify for loan modification. You need to follow it seriously so as to get the approval.

The purpose of loan modification is to ensure that you can better afford your mortgage payments. Make sure you don't miss payments under the modification agreement, as the lender will consider it a new default and it will be harder to negotiate a second modification. With each default, the chance of losing the home in foreclosure rises.


Related Readings

I was out of work for 3 months back in the late spring and early summer. After I obtained a new job I spoke with my lender and they wanted me to pay a three month "good faith" payment which was only a little above my current payment. I paid those 3 "good faith" payments and now I received a loan modification letter. The letter sets my loan back to 360 months and totally offsets the 2 years I have been paying on the loan. I owed 78,000 on my home and now according to this i will now owe 84,000. THis also increased my monthly payment by over $105 a month. THere is no way I can afford this. I thought a mortgage modification is supposed to help not hurt?? Any ideas on what I should do, I am very confused and lost. THanks in advance.

meta title: 
Mortgage loan modification
jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi sam,

You can contact your lender immediately and apply for a loan modification. The lender will look into the overall situation and let you know whether or not your request will be accepted. In case your request is not accepted, it will be better if you could get rid of the property. You can apply for a [url=http://www.mortgagefit.com/deed-lieu.html]deed in lieu of foreclosure[/url] in order to get rid of the property.

Thanks

Like | Dislike | Share | Posted: Sun, 09/25/2011 - 23:37

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

We have found a loan modification online and we are approved, we have not said anything to our bank or asked them to help us. We are not behind but our payments are so big it's getting harder and harder to pay and my husband has been out of work for over a year now. Question is do we tell or ask the bank first or go with someone we found online<

Like | Dislike | Share | Posted: Sun, 02/14/2010 - 09:16 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Is it possible to modify mortgage for the second time when the modified payment becomes tough to afford? How one can apply and how much does it take ?

[size=9:cdf89f5549][color=Red:cdf89f5549][Email address deleted as per forum rules. Thanks.][/color:cdf89f5549][/size:cdf89f5549]

Like | Dislike | Share | Posted: Fri, 05/21/2010 - 17:43 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi, I just recieved my loan mod agreement and they are adding the interest ($33,300) to my loan amount ($472,000) this brings my unpaid balance to $502,300. BofA is offering a 5 yr plan starting interest-only rate of 4% for the first yr payment $1674. 77 and to increase each yr thereafter. The final rate will be 6.5%. After 5 yrs the interest will be charged on the unpaid bal at theP&I of $3135 until P&I are paid in full (maturity date of 2037). Is this a good offer or should I try to re-negotiate to lower my Principal. Thank you in advance.

Like | Dislike | Share | Posted: Wed, 06/16/2010 - 01:27 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Thanks Sussane, so as it looks like wright now my financial situation will not going to change in the close future, this is why I was concerned if they going to raise my payments after the trial period. Do you think if i have to pay around $700 in the trial period they will keep it around this amount after the loan modification is over. I just want to make sure if my financial situation is the same they will not raise my payment to the double. I appreciate your help,thanks lilike

Like | Dislike | Share | Posted: Fri, 09/17/2010 - 16:41 | Post subject:

markdavidgustafson's picture
markdavidgustafson | Joined: December 14, 2010 06:14 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Wells Fargo wants to tranfer us to MERS for a loan modification saying we have to give them power of attorney. Not really seeming to give us a choice. Is MERS now legit?

Like | Dislike | Share | Posted: Tue, 12/14/2010 - 07:20 | Post subject:

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Doo Wop,

Did they give you a reason as to why you did not qualify for the Homeowner's Initiative Loan Modification? You have the right to ask the lender about the reasons for not qualifying for the Homeowner's Initiative Loan Modification.

If you are not satisfied with the loan modification offered to you by your lender, you can definitely apply for a deed in lieu of foreclosure. Though it will reduce your credit score, you won't be liable for the deficient amount resulting from the sale of the property.

If you can pay cash and buy a property, then you don't have to worry about credit effects or getting a mortgage. However, just for your information, a [url=http://www.mortgagefit.com/deed-lieu.html]deed in lieu of foreclosure[/url] would reduce your credit score by 250 points.

Thanks

Like | Dislike | Share | Posted: Tue, 10/06/2009 - 00:28

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Pranshu,

You can apply for a loan modification for the second time. It will be the lender's discretion whether or not he would consider your request and modify the loan for the second time. You can contact the lender for applying for a modification. As far as I know, there is no charges for it.

Thanks

Like | Dislike | Share | Posted: Fri, 05/21/2010 - 23:30

smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Razorback!

Welcome to forums!

You will have to convince the lender for loan modification. If you cannot convince the lender for it, then he will foreclose the property and you will lose it.

Feel free to ask if you've further queries.

Sussane

Like | Dislike | Share | Posted: Mon, 02/07/2011 - 22:24

sunnyca2009's picture
sunnyca2009 | Joined: August 4, 2009 07:15 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

If you are given second chance, I would say use it wisely

Like | Dislike | Share | Posted: Fri, 10/09/2009 - 22:27

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I am a family daycare provider. My business is done out of my home > I don't know what they really want to know on a p&l statement. I am just a small place, so don't have an accountant. How can I do one that they will accept so I can get approved for a modification. Should I include any of my house payment since I do use my home for daycare? Any help would be sooooo appreciated. Thank you

Like | Dislike | Share | Posted: Mon, 09/13/2010 - 16:23 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

can my husband obtain a home mortgage loan modification without my signature if I am on the original loan and deed?

Like | Dislike | Share | Posted: Mon, 11/16/2009 - 10:35 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Does it state anywhere in the program for modification that the amount of the reduction from your principle will be considered taxabel income? we have a modification of $60,000 and now owe federal tax for the what is considered earned income. this is unreal...we are trying to keep our home and were thankful for the help...only to relize that we have to pay tax on the amount. How can people take a hit on income taxes with that?[list:0dccdf7ff5][/list:u:0dccdf7ff5]

Like | Dislike | Share | Posted: Thu, 02/11/2010 - 18:18

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Jessica- I just received a modification from my lender that is at 4.25% down from 6.5%. During the trial period I was only paying 2% and just barely getting by due to time off because of medical issues, not to mention having to pay for the medical procedures and prescriptions. They added all of the payments that I missed plus fees to the back end, so the 4.25% isn't that good of a deal on the new loan amount. What happens if I don't sign and return the documents in the alloted time? Will they start foreclosure again or will they re-negotiate the modification. They are giving me only one week to answer. Thanks- Paul

Like | Dislike | Share | Posted: Mon, 11/29/2010 - 10:26 | Post subject:

admin14's picture
admin14 | Joined: December 3, 2009 12:48 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Sam,

I'm surprised you have not been foreclosed on yet. I doubt there may be much help available there.

Regards,

Jeffrey Ragan

Like | Dislike | Share | Posted: Tue, 10/04/2011 - 10:05 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

After many questions and answers between a company that was going to get us a remodification loan, payments of 2860.00 made no contact between that company and us. Sept. 22, 2010 email stating they would be contacting us on progress of loan, after three e-mails and phone calls they told me by e-mail that they would not be able to help us. File for Bankrupcy. Should we get some of that money back?

Like | Dislike | Share | Posted: Thu, 12/02/2010 - 12:44 | Post subject:

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi sukimlynn,

If the property is sold off, then the lender may want the new owners to [url=http://www.mortgagefit.com/refinance.html]refinance[/url] the mortgage. If your children are ready to do that, then I don't think you may face much problems.

Thanks

Like | Dislike | Share | Posted: Mon, 07/23/2012 - 01:03

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

we would like to sell a portion of our property to our children,it still has a 1st & 2nd mortgage

Like | Dislike | Share | Posted: Fri, 07/20/2012 - 08:20 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

lm 27 months past due can i get help

Like | Dislike | Share | Posted: Sat, 09/24/2011 - 21:54 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I feel your pain, all of you. I was fortunate enough to find a company that is legitimate. Now I know that the banks the news and government say we shouldn’t go to any company that charges, that the banks will modify your loans for free. Well, how many of us on here have had our loans modified by the banks?

A lot have lost their homes, and lot more still will unless you do what’s necessary to save your homes from the banks. I went through what most of you have, I was there. Then I was referred to Corey Lassiter of Clear Image Financial Group. They saved my home.

I know I would have lost it to Wachovia if it wasn’t for him, Tasha, Denise and the rest of the people who work there. Got me caught up on my mortgage 1st & 2nd, lowered my interested rate & payment, and secured me a 50k principle reduction.

Before anyone else on here loses their homes you need to give them a call. Don't be afraid of hiring a loan modification company, be afraid of the banks, they are the ones who are taking our homes!

I know they get the job done. News and TV made me afraid to even consider a loan modification company because they are all scams and my lender will do it for free (wrong). There hasn't been not one story about a good company and when I tried to contact my local news channel they told me that my success story wasn't news (What!)

So, I am making it my mission to spread the word on this GREAT company!

[size=9:804cf7a6cd][color=Red:804cf7a6cd][Phone number deleted as per forum rules. Thanks.][/color:804cf7a6cd][/size:804cf7a6cd]

Like | Dislike | Share | Posted: Sat, 02/20/2010 - 21:02

smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi!

Welcome to forums!

To PBurress,

As the mortgage has been discharged in your bankruptcy filing, the lender cannot make you responsible for the loan though you sign the loan modification papers. However, I will suggest you to contact your bankruptcy attorney and check out what you should do in this regard.

To xiyuan,

You won't have to pay the loan when the lender is considering your loan modification. However, you can contact your lender and check out if he will accept your payments during the loan modification process.

Feel free to ask if you've further queries.

Sussane

Like | Dislike | Share | Posted: Mon, 12/20/2010 - 20:27

adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Welcome lpnot,

Though you are unemployed, you should contact your lender and apply for a loan modification. As per a new law, the lender can reduce or suspend your dues for a given period of time. However, it would be the lender's discretion whether or not he would help you with a modification.

Like | Dislike | Share | Posted: Sun, 06/13/2010 - 22:44

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Guest,

It will be completely the lender's discretion as to whether or not the lender will consider your request and help you modify the loan.

Thanks

Like | Dislike | Share | Posted: Sun, 03/31/2013 - 23:09

rutchell.db's picture
rutchell.db | Joined: January 24, 2011 08:51 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

If you're having trouble meeting up with your current mortgage payment, you are eligible for a loan modification wherein the lender restructures the rate and terms of your loan down to an amount that is affordable and sustainable over the long term. To qualify, however, you need to prove that you have enough income to make the reduced payments on an ongoing basis.

Like | Dislike | Share | Posted: Thu, 01/27/2011 - 09:58

purplecoach2's picture
purplecoach2 | Joined: March 10, 2011 05:52 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

We have just been given a three month HAMP loan modification due to start April first. We got it our selves after two loan modification companies were unsuccessful, one we already paid to do a REST report. Any way we called both back and they reviewed Indymac"s 20 page contract and said it was really good but be sure to do the payments EXACTLY as described but NOT to pay March's payment. They said it will screw up the trial postings but didn't explain. We are nervous about this and here's why. We never defaulted to begin with. My spouse lost their job for 4 months last Spring. They offered us a three month decreased payment "to help us over the hump" and we signed the contract. We asked for loan mod and they jerked around since last year. In Jan we found a note from a Realtor asking to sell our foreclosed home!! Oh and after the three month trial they helped us by putting our payments up to full amount ( a $1000 more a month). After paying $300 for a report from a loan mod firm, the bank finally answered our questions as to how they were posting what we thought since last year were our regular on time payments. They are going to the false default arrears and fines!!! We think we shouldn't have an actual missed payment but they're not posting as them anyway despite our filed complaint to the bank and OCC and others. No one has responded to it. What is the chance that if do not pay March, that they will post the first trial payment for March and it will look like we failed the trial. The [url=http://www.mortgagefit.com/loss-mitigation.html]loss mitigation[/url] department will nit respond to the questions about this nor can we get the guy working our file to talk to us on the phone suddenly.

Like | Dislike | Share | Posted: Thu, 03/10/2011 - 18:14 | Post subject:

smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Guest!

Welcome to forums!

Rather than taking the help of a home retention company, you should have directly contacted the lender and negotiated for a loan modification. This would have been more effective rather than taking the help of a home retention company. I would suggest you to contact your lender right away and negotiate for a modification.

Feel free to ask if you've further queries.

Sussane

Like | Dislike | Share | Posted: Fri, 05/07/2010 - 00:33

adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi adela,

You definitely qualify for a loan modification. However, as both the names are on the loan documents, both of you will have to sign the modification papers.

Hi M John,

It takes some time to get the permanent modification. The delinquent amounts will get added to your loan payments and may increase your loan amount when you get the permanent modification.

Like | Dislike | Share | Posted: Sun, 05/16/2010 - 23:37

adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Welcome SammiC,

You're correct. Most of the consumers are interested in refinancing their existing high interest loans into low interest ones. This makes it easier for them to pay off their loans and own the property free and clear.

Like | Dislike | Share | Posted: Wed, 03/16/2011 - 23:31

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Need help saving home bank will not take payment 3 months behind . Ihad modfi year half ago. Need help illness been problem keeping up with pay ments that went up after mortified please help. Bill

Like | Dislike | Share | Posted: Tue, 08/02/2011 - 11:46 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I've started a blog with my day to day experience trying to get a loan modification. I hope this helps!
californialoanmodification.blogspot.com

Like | Dislike | Share | Posted: Mon, 10/05/2009 - 13:39 | Post subject:

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi peebo,

If you offer the delinquent amount in full, then there are chances that the lender will accept the amount in full and then you can keep making normal payments.

To Guest,

It is true that the lender will not help you with a loan modification as your husband is unemployed now. Unless, your husband has a job, the lender won't modify the loan as there are chances that you won't be able to pay off the loan though it's modified.

Thanks

Like | Dislike | Share | Posted: Tue, 11/23/2010 - 22:54

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Need help saving home bank will not take payment 3 months behind . Ihad modfi year half ago. Need help illness been problem keeping up with pay ments that went up after mortified please help. Bill

Like | Dislike | Share | Posted: Tue, 08/02/2011 - 11:54 | Post subject:

adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Guest,

You can try paying a little extra toward your principal amount. In order to do so, I will suggest you to have a word with your lender and take his opinion in this matter. The lender will let you know whether or not you can make the extra payments in this situation.

Like | Dislike | Share | Posted: Wed, 08/10/2011 - 23:17

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I contacted my mortage company regarding the Home Affordability Initiative and they said I qualified for a Loan Modification. I completed the trial period successfully and they then send me a notice saying that I didn't qualify for the Homeowner's Initiative Loan Modification, but I qualify for their own Loan Modification which would merely reduce the monthly payment by $245 on my 380,000 condo in Southern California, but my new balance is $400,000. So they reduced my monthly payment, but am paying $20,000 for it in the end.
I don't know what to do. The property is only worth $200,000 now. I would much rather lose the home, ruin my credit and make sure I save up all the money i'll be saving while not paying the mortgage to put a nice down payment on a better and cheaper home. What's the big deal with credit anyway, when you have a good job and can pay cash?

Any advice for or against my decision would be enlightening. Thanks!

Like | Dislike | Share | Posted: Mon, 10/05/2009 - 13:45 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Need help saving home bank will not take payment 3 months behind . Ihad modfi year half ago. Need help illness been problem keeping up with pay ments that went up after mortified please help. Bill

Like | Dislike | Share | Posted: Tue, 08/02/2011 - 11:55 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

My husband recently lost his job, due to layoffs. We decided to get a loan modification to help us make our monthly mortgage payments. As of today we have never been late on a payment or delinquent. My understanding of the terms with the loan modification is that even though we call in to make our payment the mortgage company will "claim" it as delinquent. So, yes we will be able to afford our monthly payments, but our credit takes a big hit. Is this the way a loan modification should work?

Like | Dislike | Share | Posted: Mon, 01/18/2010 - 10:30 | Post subject:

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Sheila,

If you can afford to pay off the loan after accepting the modification, then I would suggest you to go for it. This will help you in saving your property. If you are unable to pay off the loan after modification, then it's better to get rid of the property. You can apply for a deed in lieu of foreclosure and sell off the property.

Thanks

Like | Dislike | Share | Posted: Tue, 04/06/2010 - 23:30

smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Guest!

Welcome to forums!

If you do not agree to the terms and conditions of loan modification, the lender will ask you to pay off the delinquent amount in full and get current on your mortgage payments. If you cannot do so, then the lender will start foreclosure proceedings.

Feel free to ask if you've further queries.

Sussane

Like | Dislike | Share | Posted: Mon, 11/29/2010 - 21:06

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Lost my job and got behind on mortgage payments. I have been trying to get a loan modification on FHA loan through Chase for the last year. Finally got modification and loan amount has increased by $27,000 which includes back payments and interest. It is a 30 year fixed at 5% but the payment is only $80. less than original. Take the mod or bail??

Like | Dislike | Share | Posted: Tue, 04/06/2010 - 12:13

loriekelly's picture
loriekelly | Joined: June 22, 2009 12:07 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Banks are refusing to do loan modifications. Even the few they have started under the "trial" period, they are continuing to foreclose. We need clear regulation and oversight with specific recommendations. Please sign a petition that will help convince the government we need transparency, and we need to have a moratorium on foreclosures.

[size=9:8e82a19ff9][color=Red:8e82a19ff9][Link deleted as per forum rules. Thanks.][/color:8e82a19ff9][/size:8e82a19ff9]

Like | Dislike | Share | Posted: Wed, 10/28/2009 - 14:55 | Post subject:

adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Tracy,

If the loan modification process has already started, then the lender will not foreclose the property. If the lender has started the foreclosure procedure, then there are chances that the lender has rejected your loan modification offer.

Like | Dislike | Share | Posted: Sun, 10/18/2009 - 23:27

smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi!

Welcome to forums!

To nila,

If the wife wants divorce from her husband, she should contact an attorney well versed with the domestic laws of her state. The attorney will help her take the required legal steps.

To Elaine,

As you're earning a living from your home, in my opinion, you should should include it in your profit and loss statement. Also, you can contact your lender and he may guide you as to how you can fill out the statement.

Feel free to ask if you've further queries.

Sussane

Like | Dislike | Share | Posted: Mon, 09/13/2010 - 23:44

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

how long does it usually take for a modification

Like | Dislike | Share | Posted: Tue, 06/01/2010 - 17:26

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi markdavidgustafson,

Your query has been replied to in the given page:
http://www.mortgagefit.com/inprocess/about47579.html

Take a look at it. Hope it helps you.

Thanks.

Like | Dislike | Share | Posted: Tue, 12/14/2010 - 20:40

sunnyca2009's picture
sunnyca2009 | Joined: August 4, 2009 07:15 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Thats a good question james

Yep it is up to the lender to decide, if they will do one more modification

As mentioned before, it will be difficult, but you never know

Like | Dislike | Share | Posted: Fri, 10/09/2009 - 15:36

sara's picture
sara | Joined: July 5, 2006 03:16 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi lauraliew,

If you make regular payments as per the modified plan given to you in loan modification, it will not affect your credit score in any way. However, if you were already delinquent in your payments prior to applying for modification, then it would have affected your credit score as the lender would have reported it as late payment to the credit bureau.

Take care.

Like | Dislike | Share | Posted: Tue, 01/19/2010 - 01:09

christinehynes's picture
christinehynes | Joined: September 5, 2009 11:56 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

If you have a loan going through the federal MHA program the banks are not allowed to continue with the foreclosure process while you are in the modification process. However if you were behind on payments before starting and are denied a loan modification they are able to pick up where they left off with the foreclosure process.

Like | Dislike | Share | Posted: Mon, 12/14/2009 - 16:24

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Guest,

The time period required to get a loan modification approved will vary from one lender to another. You need to get in touch with your lender and check out the time period he would require to modify your loan.

Thanks

Like | Dislike | Share | Posted: Tue, 06/01/2010 - 23:11

adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi cirinorosa,

Your query has been replied to in the given page: http://www.mortgagefit.com/Mortgage-Basics/whom-do-i-speak-with-about-an... . Please take a look at it. I hope it will help you.

Like | Dislike | Share | Posted: Thu, 11/14/2013 - 20:06

smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi anonymous!

Welcome to forums!

The amount of principle debt which is forgiven will be considered as your income. Thus, the IRS will be able to charge taxes on that amount. As far as I can understand, you will have to pay taxes on that forgiven amount.

Feel free to ask if you've further queries.

Sussane

Like | Dislike | Share | Posted: Thu, 02/11/2010 - 22:19

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