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I currently have a have a motgage with National City. Just became 1 payment behind after 2 years. Low credit score 540. Medical collections starting to appear on credit. I wanted to find out about Loan modification, what does it exactly do to your credit? Don't want another late payment. Any suggestions would be greatly appreciated. Btw- In the process of Streamlining loan since May23rd still today broker says in the last stages to hang on. When he said that it would take 2 weeks. That isi one reason of late payment.
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You have to prove hardship for the lender and ask for a Loan Modification. They might change your rate or balance....or approve a shortsale if you plan to move.
A loan modification does nothing to your credit. It is simply a Changing of the terms on the mortgage that both parties agree to... could be the rate, the amortization or the balance or FIXED or ARM or INTEREST ONLY, that is all between the borrower and the Note Holder... You and Nat Schitty. With that said, if you can pay your mortgage as agreed or newly agreed your "scores" will rise. Amerisave has given good advice and I will only add a couple of things of note: 1) With some...not all lenders, but some.. hardship is not a prerequisite for loan modification. A good friend of mine with perfect everything got one for INDYMAC (R.I.P.) as last OCT they were in need to "convert" any FNMA ARMS to fixed because they were trying to "look better" in the public eye (stock market) Worked for my client as he received a FREE REFI (No costs to get a FIXED RATE), but Indymac still imploded (2 days ago, but lost in the FNMA/FREDDIE storyline). I do hope your Broker is taking care of you and that clear communication and stipulations are being met. 1 final thing to think about is simply this: Most people are realizing that it is simply the loan size and not as much the rate that is killing them financially. Reducing a rate 1-2% helps for sure, but if the loan size itself is too great, just make sure you realize personally what you can afford and make your best decision. I am sorry to hear of your strife and stress and wish you well.
Martin hit it right on the head...it's not only the rate that's hurting, rate is important, but the residual balance of mortgages is what is really hurting and limiting options. Considering that many areas are actually experiencing declines in value, mortgage balances are an even bigger factor for borrowers' options. Can't refinance because you owe more than your balance; can't sell unless through short sale. If you could get both rate and balance modifications, that would serve you the best. Chairman Bernanke even suggested this about 7 months ago to try to help mitigate the foreclosure crisis, but lenders are obviously loathe to forgive millions in debt that they are legitimately owed. Of course, that's essentially what's happening in the form of short sales and foreclosures anyway.
g1216, did your broker/lender tell you to stop making payments? If so, shame on both of you. If not, just b/c you are refinancing does not mean to stop paying your bills. Pay your bills as if you nothing is going on, that way if your loan is turned down you are not in a worse position then prior.
Martin, I service an area in California that has declined 44% in the past year. I know many homeowners that have tried to get modification but their bank simply won't work with them. I also know of 2 homeowners that had success getting a temporary rate freeze for 1 year from Wachovia. Can you tell me which lenders do not require proof of hardship for loan modification?
Thnak you. All advise is greatly appreciated.
Most lenders will require proof of hardship for some type of relief. If you are rich, why would you need relief? Lenders are in it to make money too. But I think they are being reasonable now, they know many of us (or you) are in trouble. Call your lender up. You have nothing to lose. Just ask. All they can say is no. Then you can post again and we will suggest what else you can do.
Don't laugh, but it was INDYMAC (R.I.P.) that contacted my friend who had a 3/1 ARM FULL DOC FNMA LOAN that was paid promptly. It was more of a showing for IMB in an attempt to show WALL ST that they did not have many ARMS left in their portfolio (LAST OCTOBER). I told my friend although unorhtodoxed, don't look a gifthorse in the mouth and take it. He signed, notarized it and POOF... 30 year fixed without cost or hardship. Wish I had a handful of them for you and sorry to hear of such a drop in values there as it probably gridlocks any lending besides purchases it would seem.
In my experience, the modifications are going to people that truly need help....not the ones with the capacity to work their way though it.
In California there was a bill passed last week mandating servicers to make efforts to contact borrowers and offer loan modifications before default is filed.
I think this is a mistake. Most of these scenarios are hopeless and not fixable. If the homeowner cannot afford their loan payments anymore, why should it be the LENDERS responsibility to make things easier?
They're making the lenders proactively contact borrowers?! That's silly. Lawmakers definitely do not understand how financial firms work. Anything they, or we do costs money. Where do we get the money to pay for such an increase in service, from borrowers! In the form of higher rates, fees, costs, what have you. Similar stuff is happening in Illinois. For certain programs borrowers are required to attend HUD credit counseling, which they can ignore. Fine! But the kicker is the cost of the counseling, $350, cannot be passed along to the borrower in any way! What?! OK, I guess I can pay for that from my MAGIC MONEY TREE or my GOLD COIN FOUNTAIN!
Some things i will never understand. Why should it be the lenders responsiblity to contact the home owner and renegoiate the mortgage in the home owners favor. I understand people run into hardship issues but when are any home owners going to stop blaming lenders and take resposiblity for the fact that they bought too much house. We have all been there, when you pre-qual your client for $250,000 and of course the house they want is $285,000. The client and the realtor call and ask you to find a way so they can afford it. Next thing you know they are in an interest only adjustable. 3 years later trouble starts and fingers get pointed at everyone else. Then again maybe the media is making it worse they do tend to do that.
This is a good link to the info about the bill. It is expected to be signed by Arnold this week.
I just don't get it. If you are 3 payments behind and you wan't to see if you can work something out to save your house, is it that difficult to pick up the phone and call your lender?
I understand politicians like the idea of stalling forecelosure (remember Hillary and her brilliant moratoreum plan). I can see where that concept would appeal to troubled homeowners/AKA voters. All it does is prolong the inevitable and extend the length of time to flush out bad loans.
I have been working with a client in regards to a modification to Indymac and we have been working on it since April and can't seem to get anywhere.
Loan mods are difficult.
Every lender is different as well. There is a gov bill that would guarantee 90% FHA of current value to the lender if they write off the rest.
However, people paying their mortgage are paying customers. Banks arent going to take a paying customer off their books and modify their mortgages.
People in default who cant pay will be targeted to get the thing out of banko and back on payment track.
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