Profile picture for Asima77

If I get my Loan Modified, and a while later I decide to sell my home. What are the repercussions?

I live in a 3600 sq ft. home with 5 bedrooms and 2 1/2 bathrooms. I lost my small business and am unemployed with no means of income. My son-in-law and daughter live with me and help with rent and utilities. I am looking to get a Loan Modification and I hope for it to be approved. After my loan is modified and later I decide to sell my home (to downgrade) and move into a smaller one, what are the repercussions? Would I be allowed to sell my property while Im paying the modified amount each month? Please advise.  
  • January 07 2012 - Charlotte
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Answers (7)

" IF you are successful in completing the loan modification, there are no issues with selling your home down the road, "
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Again this is untrue. Since loan mods often come with a forbearance plan or principal reduction, there are in issues regarding the repayment of these that can and will arise. 

I would be extremely careful about telling people that there are no consequences to a loan modification. The loan Mod itself will damage credit such that immediate repurchase will be difficult.
  • February 23 2012
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Profile picture for shapiroamg
Those of us that are dedicated to the process will have a lot of experience and will be able to give you some good advice.
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Right on Ann but 4 years too late. Best to see when the question was asked otherwise you have just resurrected a zombie thread.
  • February 23 2012
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Profile picture for AnnRudd
IF you are successful in completing the loan modification, there are no issues with selling your home down the road, unless the documents from the bank say there are (although I've never seen any that did). However, if you list your home during the loan mod process, it will stop the loan modification. Many times folks that are working on a loan modification list the home as a short sale to start the process "just in case." But they stop the loan mod dead in it's tracks. Unfortunately, the reality is a loan modification rarely works for a home owner and a short sale is their only option. Statistics tell us that most folks that complete a loan modification will be back in foreclosure in less than a year.  Find a good short sale agent to give you some advice. Those of us that are dedicated to the process will have a lot of experience and will be able to give you some good advice.
  • February 23 2012
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Tracy - if their payment history is less than perfect how eactly would they be able to buy another home and downgrade?
  • January 08 2012
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There are no repercussions for selling your home while under a modification.  You are allowed to sell your home as usual, but of course if you owe more than the home is worth you'll have to request a short sale from your lender. Hope this helps.
  • January 07 2012
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If you have no income "how would you plan on paying the new modified loan amount?"  will be the first question from your lender.  Unfortunately, you don't have a valid answer.

Of course this is a better question for your lender who's conducting the modification.  Modifications are designed to help borrowers stay in their current home.  They entail quite a bit of paperwork as well.  

What is your time frame for selling?  

Like a refinance transaction, the bank may not want to hear that you plan on selling the home anytime soon.  
  • January 07 2012
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If you have no income a modification will not be approved.  Many lenders are also treating Modification like a foreclosure or shortsale and may not allow you to obtain new financing for a period of time.
  • January 07 2012
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