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WHY DON'T PEOPLE TRY A REMODIFICATION WITH THEIR BANK BEFORE SPENDING MONEY TO REFINANCE.

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February 15 2009 - Great Falls
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In many cases the bank that collects the payment (called "servicing the loan") is not the owner of the note. They may have sold the loan (to Fannie Mae or Freddie Mac) and simply collect the payments, maintain the tax/ins escrows and clip off a .25% of interest for the servicing fee while sending the rest onto Fannie/Freddie. If a lender has sold your loan, there is no obligation to notify the borrower, so it would be something the borrower wouldn't even be aware of...unless of course they called the lender and asked for a loan mod...at that point the bank would advise of the status.
So to answer your question, it may be that the borrower's lender cannot modify the loan at all...simply because they no longer own the paper.
(FYI---if a lender sells the servicing of your loan to another lender you ARE notified obviously because the payments are going to be collected by a new servicing bank/mortgage co)
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February 15 2009
Besides the other 2 pros stomping on water cooler talk... Modifications are basically made when a borrower is already heavily delinquent  (90+ days behind)  kicking the foreclosure/cost.... will they pay anyway.. do they have a job?? yada yada...  Once the mortgage is in arrears....  there is no REFI available.. Here's very good and simple advice and an easy way to remember it for anyone contemplating this scenario:

Once the mortgage is in arrears (aka default)...  the homeowner is eventually going to take it in the rear.  This grandstanding is just that... grandstanding by elected officials.  Ask Katrina Victims if ABC's Extreme Home Makeovers has rebuilt New Orleans for free... Nope..1 house..  The Govt (and it's not their responsibility) is not and can not make us whole..  Wish I had better news..  I guess I am more saddened by how many folks are not willing to pay for their mortgages simply because the value has dropped.  Hi LJ/GVD... good stuff.
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February 15 2009
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Because a modification of a loan is only made when the lender determines that it will cost them more money to not modify then it will to keep the current agreement.  If you can make a payment at 6% why should the lender modify the loan to 5%?  It makes no sense, they are living up to their end of the original agreement so should you, so the only way out the original agreement is to pay them off in full.  To do that you can pay it off with cash or refiance into a completely new loan.


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February 15 2009
I assume for the same reason that people go to the grocery store and buy their food rather than hanging out on a corner waiting for someone to give them some out of the goodness of their heart!

The public is being mislead as to what a loan modification is and who can get one.
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February 15 2009
 
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