What is a Loan Modification? That is where you and your lender agree to modify one or more of the terms of your home loan. The terms could be a lower interest rate, an extension of the length of the loan (like making a 30 year loan into a 40 year loan), a conversion of an adjustable rate loan (called an ARM) to a fixed rate, the deferring of some of your payments, or any other modification of loan terms. On paper...this is a wonderful idea. The reality is a mine field laid over quicksand. If you do choose to take the big leap of the loan modification process on your own, you must first contact the lender and they will lead you to the correct department, normally the loss mitigation department. However, the correct department of a famous bank is one of the worst places you could encounter for help. Employees of this famous bank openly admitted that they are told to give applicants the run- around. The number of people who get mods is staggeringly low...like 4%. Say you are a hearty and dauntless soul and you persevere...what is available to you?
There are many frustrations with the program, fraud by bogus modification companies, servicers' non-responsiveness, and virtually no principal reduction for those with seriously upside down loans. The pressure exerted by Treasury officials for servicers to speed up and streamline the process may finally be netting results. We will soon be able to track their progress ourselves when the announced ratings on servicer quality are published and available to the public. What we do know now is that less than 20% of eligible mortgage holders have been helped by receiving a modification.
The most common mortgage relief loan modification programs offered by banks are setup to give you a lower monthly payment or a little breathing room, in order to catch up payments and in turn save your home. What's the reality..."I went through a lot of back and forth and the all too familiar lost paperwork before finally getting the loan modification. When we finally received the modification they only took $100 off our monthly payment." This is from our unsolicited blog comment files. Other optional forms of loan modification include:
the forbearance, which suspends your monthly mortgage payment for a short period of time. There is a catch; this usually is only offered to those with a hardship such as losing their jobs or medical bills. This program only lasts for a few months and the banks accept payment to resume and all past-due payments to be caught up. With the elections coming up and people threatening to vote in representatives who will erase current medical coverage...don't get sick.
Another program offered in the form of a loan modification is what is called a repayment plan, this helps homeowners repay what payments are past due. Many times banks or lenders will give you the opportunity to make up your late payment, by working out a schedule over the next year, which you will pay with your current mortgage. Let me re-word this: you go in looking for relief and they tell you to pay 1.5 times your mortgage. 3-When offering the program of reducing the interest rate, this only lasts for a short time and your rate will escalate after a few years and leave you the borrower with a balloon payment. In this economy...trying saving up for a spare tire let alone some thousands of dollars balloon payment. The lender agrees to change your 30 year to a 40 or 50 year mortgage. With only 4% of loan modifications going through we have yet to see any hard figures compiled on your chances of receiving this option. Your odds are better playing your state lottery. And those odds are like throwing a baseball from California and hitting the moon.
Having a proposal as opposed to simply applying also speeds up the process by performing most of the work upfront making it easier for your mortgage servicer to render a favorable decision. Whatever method is chosen, troubled borrowers need to move forward, and should get the ball rolling, the sooner, the better.
There are many frustrations with the program, fraud by bogus modification companies, servicers' non-responsiveness, and virtually no principal reduction for those with seriously upside down loans. The pressure exerted by Treasury officials for servicers to speed up and streamline the process may finally be netting results. We will soon be able to track their progress ourselves when the announced ratings on servicer quality are published and available to the public. What we do know now is that less than 20% of eligible mortgage holders have been helped by receiving a modification.
The most common mortgage relief loan modification programs offered by banks are setup to give you a lower monthly payment or a little breathing room, in order to catch up payments and in turn save your home. What's the reality..."I went through a lot of back and forth and the all too familiar lost paperwork before finally getting the loan modification. When we finally received the modification they only took $100 off our monthly payment." This is from our unsolicited blog comment files. Other optional forms of loan modification include:
the forbearance, which suspends your monthly mortgage payment for a short period of time. There is a catch; this usually is only offered to those with a hardship such as losing their jobs or medical bills. This program only lasts for a few months and the banks accept payment to resume and all past-due payments to be caught up. With the elections coming up and people threatening to vote in representatives who will erase current medical coverage...don't get sick.
Another program offered in the form of a loan modification is what is called a repayment plan, this helps homeowners repay what payments are past due. Many times banks or lenders will give you the opportunity to make up your late payment, by working out a schedule over the next year, which you will pay with your current mortgage. Let me re-word this: you go in looking for relief and they tell you to pay 1.5 times your mortgage. 3-When offering the program of reducing the interest rate, this only lasts for a short time and your rate will escalate after a few years and leave you the borrower with a balloon payment. In this economy...trying saving up for a spare tire let alone some thousands of dollars balloon payment. The lender agrees to change your 30 year to a 40 or 50 year mortgage. With only 4% of loan modifications going through we have yet to see any hard figures compiled on your chances of receiving this option. Your odds are better playing your state lottery. And those odds are like throwing a baseball from California and hitting the moon.
Having a proposal as opposed to simply applying also speeds up the process by performing most of the work upfront making it easier for your mortgage servicer to render a favorable decision. Whatever method is chosen, troubled borrowers need to move forward, and should get the ball rolling, the sooner, the better.
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