One of the common questions that I am asked almost daily is “will my lender modify my current mortgage so that I can afford it and keep my house?”
My general answer?
It depends.
I hear stories daily about people who have successfully received loan modifications from their lender and virtually every story followed a different process to get the loan modified.
Some people were late on their mortgage, some were not. Some have adjustable interest rates and some do not. Some have 2 mortgages (usually an 80/20) with the same lender, some have 2 mortgages with different lenders. Some have contacted their lender seeking a loan modification, some did not. Some people got their loan modified in weeks, some got it modified in months.
There are a few common “truisms” that I see among the people I talk to.
The number one thing that I see across the board for people who have gotten a loan modification from their lender?
They were in frequent communication with multiple people and multiple departments at their lender before they received a loan modification.
So, if you are in the process of evaluating your options and what your choices are regarding a loan modification - my best advice is that you need to be in almost constant contact with your current lender.
And if they tell you one thing today, they may tell you something different next week — so keep trying.
Why is that?
Well, one big reason is that there is at least one proposal on the table to pass into law where lenders will be encouraged to modify loans because the government will absorb some of the risk.
This week, I was asked to be a guest on a large news-talk radio show in our market and talk about mortgage-related stuff. As part of the show, we took calls from the public and I had to answer their questions.
The main idea behind the most popular question?
“Hi Justin! __________________ is my situation. Will my lender modify my loan?”
My answer?
It depends!
And then I proceeded to explain how they need to get on the phone with their lender and start talking to them even if they have already tried that.
Because the rules of loan modification are not set in stone and are changing — sometimes daily.
Last 5 posts in Uncategorized
- Should You Invest In Phoenix Real Estate Now? - January 3rd, 2009
- A Funny Thing Happened on My Way to New Jersey. - January 2nd, 2009
- Dear 2009, can I have my money back? - January 2nd, 2009
- Why Are Option ARMs Dead? They Were Too Successful - January 2nd, 2009
- Come and Get Your Love (4.5% Mortgage Rate) - December 30th, 2008
- Stumble it!
- Categories: Uncategorized
Comments
3 Comments so far
ROBERT
ALL SERVICERS WILL NOT, WILL NOT!! HELP HOMEOWNERS, UNLESS YOU ARE 30 DAYS PAST DUE WHICH HITS YOUR CREDIT ACROSS EVERY BUREAU - TRANS UNION, EQUIFAX, EXPERIAN, AND THE 4TH BUREAU. ITS SAD, YOU HAVE TO LATE IN ORDER TO GET HELP FROM YOUR SERVICERS AS THEIR INVESTORS DO NOT WANT TO TAKE A HIT ON PRINCIPAL UNLESS THE GOVERNMENT IS THE INVESTOR, THEN, AND ONLY THEN, WILL THE SERVICERS HELP YOU.
Justin McHood
@Robert,
Thanks for your comment.
What you are saying is something that we commonly hear — that many lenders are not talking with homeowners about their mortgage problems unless they are officially late.
I can’t say that *every* lender is not working with people until they are late on their mortgage, but it is common.
And of course, they usually throw in the “we can’t tell you to be late on your mortgage and it is important that you keep making your mortgage payment” when you call just so that you don’t mis-understand and hear them say “if you want help, miss your mortgage payment!”
Should the proposed loan modification legislation by the FDIC pass, I suspect that this will change, but there really isn’t a way to know for sure until it happens.
beachdude
Loan modification is a process whereby a home owner’s mortgage is modified and both the lender and homeowner are bound by the new terms of the new mortgage. The most common loan modifications are listed below:
lowering the mortgage interest rate
reducing the mortgage principal balance
fixing adjustable interest rates within the mortgage
increasing the loan term throughout the mortgage
forgiveness of payment defaults and fees
or any combination of the above
A loan modification is a permanent change in one or more of the terms of a mortgagor’s loan, it allows the mortgage loan to be reinstated and results in a payment the mortgagor can afford.
Check out our Public site at http://LOANMODIFICATIONMORTGAGE.ORG