Profile picture for tiredofthis

Loan Modification HELP

I finally received my load mod paperwork from BAC after about 9 months.  The question I have is that have added almost 20 grand towards my prinicple for past interest that I had defaulted on.  They did lower my interest rate to 4.5%.  So my new loan balance is now around 40 to 50 grand more than my house is worth.  I just don't understand it.  My morgage payment only dropped about 2 hundred a month.  I just don't see where I'm saving.  Does this make any sense to anyone?
  • April 16 2010 - US
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Answers (5)

Principle reduction is not the primary concern of the bank and is the last thing the workout addresses.  Less than 1 in 10 applicants are even getting Trial periods, let alone permanent workouts -- you should be thankful.  But if you were looking for a market value principle reduction -- someone was misleading you BIG TIME.  BOA is a tough one and 9 months is unfortunately standard, so sounds like you got a good deal but your expectations were off.....
  • April 16 2010
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Profile picture for wetdawgs
Sounds like you came out quite well. You are now have improved monthly cash flow. 

Very very few loan modifications will lower the principal, and of course as you missed a lot of payments that debt doesn't magically disappear.

If you don't like what you've ended up with, would you prefer to go back to your old payments with the defaulted amount owing?  

The media is doing the public a disservice in that the headlines make it seem as if principal reduction and forgiveness of missed payments are no brainers.


  • April 16 2010
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Profile picture for SoCal Engr
You are saving $200/month in cash flow. While many people are upside-down on their mortgage/value, the loan mods (my understanding) target people who are having trouble making their payments. This means decreasing the amount paid monthly - through lower rates, extended terms, or a combination of the two.

As to the $20K in unpaid interest, were you expecting them to just forgive that debt? That can happen in some instances, but it's not common.

Where you are "saving" is on monthly cash flow. Loan mods are not intended to put you into a positive equity position, just make it so that the loan terms are easier for you to meet.
  • April 16 2010
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Profile picture for sunnyview
No, it doesn't make sense. They lowered your payment and then left you underwater. Some people don't care about that part as long as they can stay in the house, but I think that being underwater is one of the main reasons why so many people drop out of their loan modifications after they get them done. 

What state are you in? Some states allow you to walk away and pay nothing, while other states allow for the bank to get a deficiency judgement after foreclosure. You may have other options, but they all have consequences. If this modification will not work for you, you need to get information on other things you can do to get yourself moving forward.
  • April 16 2010
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Profile picture for tonygim
yes.  It is not the banks responsibility to lower your rate to below 4.5%.  You do have the choice to walk away but you may still be responsible for the difference between the loan and the sale. 
  • April 16 2010
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