Posted on: 30th Mar, 2008 07:46pm
If you're delinquent on your mortgage, or if you're in financial hardship which may affect on-time payments, mortgage modification may be worth considering. Loan modification is what borrowers look for when they are facing a long term reduction in income and fail to keep up with their loan payments.
Mortgage modification may include any of the following:
Mortgage modification may include any of the following:
- Reducing your mortgage rate
- Extending the loan term
- Adding missed payments and/or extending the loan term
Mortgage modification risks
If your loan modification program adds missed payments into the loan in order to bring your payments up to date, the mortgage balance will increase. Also, you'll have to pay legal fees which are added to the loan balance. So, your monthly payments are likely to go up depending upon how much you've saved to cover the back payments.
However, the monthly payments can be reduced if the lender agrees to extend the loan term. This is quite common in case of a fixed rate mortgage where the investor to whom your mortgage is sold off will not allow the lender for a rate reduction. But if you're current on the loan and need relief from an ARM, your monthly payments won't be raised. Rather, the mortgage rate will be reset for 5 years (approx.) to the original rate. However, if you are delinquent on an ARM, the interest rate will be reset but depending upon how much you're delinquent, your payments may still go up.
A loan modification program helps modify your mortgage note and avoid foreclosure but does not cancel the note. In case the existing note is cancelled and replaced by a new one, it becomes a mortgage refinance.
However, the monthly payments can be reduced if the lender agrees to extend the loan term. This is quite common in case of a fixed rate mortgage where the investor to whom your mortgage is sold off will not allow the lender for a rate reduction. But if you're current on the loan and need relief from an ARM, your monthly payments won't be raised. Rather, the mortgage rate will be reset for 5 years (approx.) to the original rate. However, if you are delinquent on an ARM, the interest rate will be reset but depending upon how much you're delinquent, your payments may still go up.
A loan modification program helps modify your mortgage note and avoid foreclosure but does not cancel the note. In case the existing note is cancelled and replaced by a new one, it becomes a mortgage refinance.
We currently have 2 mortgages which we are having trouble paying. Our lender has suggested we modify the loan because we are in a high interest only mortgage. Are there risks we should look for? Should we seek counsel? Our original loan officer lied on our financial paperwork and we should have never been qualified for this type of loan. We only purchased with an interest only loan to give us time to sell the house we were living in prior to purchasing this home. That house is still on the market and doesn't look like it will sell anytime soon. Any advise will be helpful.
hi danielle,
i guess you took out the interest-only loan just to get access to funds till you could sell the home. i have to say this but this doesn't seem to be a good decision on your part. it is at times quite difficult to manage two loans on the same house until and unless you have the funds required.
there might be risks involved because i've heard loan modification often increases your monthly payments. so you'd have to talk to your lender and then come to a proper solution. may be he can suggest aletrrnatve solutions like another reapyment plan or a refinance. i suggest that you have a stright talk eith your lender and while yuou do so, seek free consultation with the loan consultants in this community.
take care
i guess you took out the interest-only loan just to get access to funds till you could sell the home. i have to say this but this doesn't seem to be a good decision on your part. it is at times quite difficult to manage two loans on the same house until and unless you have the funds required.
there might be risks involved because i've heard loan modification often increases your monthly payments. so you'd have to talk to your lender and then come to a proper solution. may be he can suggest aletrrnatve solutions like another reapyment plan or a refinance. i suggest that you have a stright talk eith your lender and while yuou do so, seek free consultation with the loan consultants in this community.
take care
Hi danielle,
Welcome to the forum.
You can go for loan modification if it decreases your monthly payments and also your interest. It is meaningless to go for loan modification if the monthly payments and the interest rate increase.
Feel free to ask if you have any further questions.
Best of luck,
Larry.
Welcome to the forum.
You can go for loan modification if it decreases your monthly payments and also your interest. It is meaningless to go for loan modification if the monthly payments and the interest rate increase.
Feel free to ask if you have any further questions.
Best of luck,
Larry.
Is there anyway my lender can reduce the principal balance on a residential property. Property is 4 months default payment. I want to keep it if they lower the principal. I received the ANNUAL REVIEW NOTIFICATION asses value base on county is 370,000, Principal balance of 530,000
Hi Gil,
Have you consulted with your lender and requested him to reduce your loan balance. Although I don't think the lender is going to reduce the principal balance of your mortgage. He may only reduce the interest rate and the monthly payments by modifying your mortgage.
Take some action ASAP otherwise you are going to face foreclosure as you are already 4 months behind on your payments.
Feel free to ask if you have any further questions.
Best of luck,
Larry
Have you consulted with your lender and requested him to reduce your loan balance. Although I don't think the lender is going to reduce the principal balance of your mortgage. He may only reduce the interest rate and the monthly payments by modifying your mortgage.
Take some action ASAP otherwise you are going to face foreclosure as you are already 4 months behind on your payments.
Feel free to ask if you have any further questions.
Best of luck,
Larry
I was behind 3 months on my payments and didn't start a foreclosure process but I needed help bad to get caught up and save my home. I called US Mortgage Modification and worked with a rep. named Jeff, he was awesome. Anyways, long story short, he got my mortgage re-instated with no fee to the lender and saved me about 37% on my monthly payments and I even didn't have to make a payment until September of 2008, 45 days later approx. My question is: Do you think I could have done this on my own?? thank you, Michael
Hi Mikey B!
Welcome to forums!
You did a good thing by consulting a representative of US Mortgage Modification. They know how to deal with these situations.
Feel free to ask if you have further queries.
Sussane.
Welcome to forums!
You did a good thing by consulting a representative of US Mortgage Modification. They know how to deal with these situations.
Feel free to ask if you have further queries.
Sussane.
I have 2 loans with countrywide; the first is about 144,000 at 11% with adj interest rate; the second is 36,000 at 13% fixed rate. Not behind on mort payments but if loan adjusts again afraid wont be able to afford it. Shld do Loan Modification, have poor credit. Will FHA finance me? What are best companies for Loan Modificaitons?
Am about 6 months behind in mortgage; home went into foreclosure on 06 Jan 2009. Need lower monthly payment, have poor credit due to late mort payments, dont want lose home. Is Loan Modification good option? What are reliable companies; non-fradulent?
Hi,
To tnsmith,
As you are not late on payments, you can first try refinancing the mortgage at a lower rate. I think a FHA refinance is possible for you provided if you have a credit score of at least 580. Moreover, you should not have any collections or late payments on your credit report.
To erandjr,
You have mentioned that your property has been foreclosed on 6th January, 2009. If it's already foreclosed and sold in the auction, then you will not be able to save your home by a loan modification.
If you have only received a foreclosure notice from the lender, then you can definitely speak to the lender about a loan modification. To know more about loan modification, check out the following link:
http://www.mortgagefit.com/know-how/loan-modification.html
Thanks
To tnsmith,
As you are not late on payments, you can first try refinancing the mortgage at a lower rate. I think a FHA refinance is possible for you provided if you have a credit score of at least 580. Moreover, you should not have any collections or late payments on your credit report.
To erandjr,
You have mentioned that your property has been foreclosed on 6th January, 2009. If it's already foreclosed and sold in the auction, then you will not be able to save your home by a loan modification.
If you have only received a foreclosure notice from the lender, then you can definitely speak to the lender about a loan modification. To know more about loan modification, check out the following link:
http://www.mortgagefit.com/know-how/loan-modification.html
Thanks
We are current on our payments, we are only paying interest. (we have a 5 yr ARM fixed, in two years it will become a variable interest loan). We are retiring next year and will not be able to make the payments (not even interest only.) We owe twice what the house is worth now. We asked our mortgage company to modify our loan but they said that at this point we don't qualify. We would like to stay in the house and we could make payments (once retired) if the interest rate is lowered, (even if the principal stays the same). Is there anything that we can do now to prevent ourselves from falling behind on payments next year?
Hi Guest,
The lender will not modify your loan, unless they are sure that you will be able to make the payments under the modified plan. Since you are going to retire next year, it is likely that the lender will not modify the loan. In that case, the other option you have is to refinance the loan into a lower rate. Considering your impending retirement, it will be difficult for you to qualify for a refinance. If you have good credit score and a good amount of down payment, some lenders may consider offering you a loan.
The lender will not modify your loan, unless they are sure that you will be able to make the payments under the modified plan. Since you are going to retire next year, it is likely that the lender will not modify the loan. In that case, the other option you have is to refinance the loan into a lower rate. Considering your impending retirement, it will be difficult for you to qualify for a refinance. If you have good credit score and a good amount of down payment, some lenders may consider offering you a loan.
I have spoken with you previously. I have 2 loans with countrywide now Bank of America; the first is about 144,000 at 11% with adj interest rate; the second is 36,000 at 13% fixed rate. Not behind on mort payments but if loan adjusts again afraid wont be able to afford it. Tried to negotiate with them and they state I am not eligilbe. Have poor credit; Score about 520. Is loan modification and option what companies are not known for SCAMS
I am in the trial stages of a loan modification. My question is a scary thought, for us... My husband and I live in the home. My son abandoned the property 1 year ago, in other words, moved out and totally disregarded us as parents. To put it correct perspective, my son was kicked out and will have nothing to do with us... Will the mortgage modification ask for my son's information too? If so, it will never be possible to obtain it... where does that leave my husband and I?
to tinsmith,
a loan modification can definitely be an option for you. as your credit score is quite low, chances of a refinance is impossible. in such a situation, you can at least try to lower your monthly payments through loan modification. interest rates of 11% and 13% are quite high. the current interest rates on home loans are low and it would have much better if you could refinance both the mortgages at current market rate.
as far as the scams are concerned, all i can say is beware of any modification service provider who charges a good amount of fees upfront. talk with the loss mitigation dept. of the lending company and check out if you qualify for any modification program.
to phyllisg,
is your son on the loan? if he is not, then the lender will never want to know his information to modify the loan. if he is one of the borrowers on the loan, the lender will ask about his financial condition before approving the loan modification. however, i do not think it is going to create any problem with your loan modification request. if you and your husband are on the loan, your son financial information will not be too important. you can explain the scenario to your lender and i believe they will understand your situation.
a loan modification can definitely be an option for you. as your credit score is quite low, chances of a refinance is impossible. in such a situation, you can at least try to lower your monthly payments through loan modification. interest rates of 11% and 13% are quite high. the current interest rates on home loans are low and it would have much better if you could refinance both the mortgages at current market rate.
as far as the scams are concerned, all i can say is beware of any modification service provider who charges a good amount of fees upfront. talk with the loss mitigation dept. of the lending company and check out if you qualify for any modification program.
to phyllisg,
is your son on the loan? if he is not, then the lender will never want to know his information to modify the loan. if he is one of the borrowers on the loan, the lender will ask about his financial condition before approving the loan modification. however, i do not think it is going to create any problem with your loan modification request. if you and your husband are on the loan, your son financial information will not be too important. you can explain the scenario to your lender and i believe they will understand your situation.
i'm currently waiting to close on short pay refinance loan. a few months ago my mortgage company sent me a packet for a loan modification which was never returned to them and now my mortgage company told me that i was under a forbearance/ agreement plan that will help me modify my mortgage.
we never agreed to this modification we are waiting for our loan for the short pay off refinance gets undersigned so i called my mortgage company and asked to put me back to my regular payment plan and they agreed to
remove me from the forbearance/ agreement plan but with a warning that a loan modification is an only shot and that if i refuse i will no longer be able to modify in the future. if this true? what is my short pay refinance fails to go through will i be stuck without the opportunity to apply for a modification again? would my only option be to foreclose on my home.
please advice.
we never agreed to this modification we are waiting for our loan for the short pay off refinance gets undersigned so i called my mortgage company and asked to put me back to my regular payment plan and they agreed to
remove me from the forbearance/ agreement plan but with a warning that a loan modification is an only shot and that if i refuse i will no longer be able to modify in the future. if this true? what is my short pay refinance fails to go through will i be stuck without the opportunity to apply for a modification again? would my only option be to foreclose on my home.
please advice.