FACT: There is no government program that forces lenders to modify your loan.

The banks have no legal obligation to change any aspect of your loan. This decision is completely voluntary. There are government programs that provide incentives for lenders and banks to modify a loan, but lenders still make more money by foreclosing. Additionally, the banks can roll “legal fees” into your new modified loan, which were incurred during the modification and trial modification process. This means not only are you paying your previous loan balance, you are also paying additional lawyers fees, foreclosure extension fees, late fees, etc. While the media continues to promise HELP for struggling homeowners, the fact remains that banks are NOT modifying loans to current market value.

Banks may agree to temporarily modify your monthly payment and interest rate, however, banks will NOT reduce your overall loan payoff.

Did you know that 30% of homeowners who fall behind on their mortgages catch up? This means that if the banks wait long enough, they know that you will borrow money from your 401(k), your credit cards, your family, or wherever else you can find it so that you catch up on your mortgage. This is precisely why banks will not work with you until you are months behind on your house payments after which your credit has already been damaged.

Additionally, more than half of those who do receive modifications fall behind again within 6 months. The banks know there is a good chance that any effort it puts forth to modify your loan may result in a failure. This is why banks offer “trial modifications.” The trial modification is just another tactic which banks use to trick you into paying additional mortgage payments (up to six month’s worth) before they deny your loan modification or foreclose.

Remember, if you are offered a loan modification, don’t just focus on the monthly payment. Look closely at the terms of the loan.

1) What is the new principal?
2) Does the interest rate change during the life of the loan?
3) When does the interest rate jump back up?
4) What will the payment be at the end of the 3-to-5 year modification period?

Most modified loans fail for a reason; THEY ARE TERRIBLE LOANS. What is the point of modifying your loan for three-to-five years and then after the modification period is over, you’re in the same position as when you started? The loan payment WILL jump back up, you won’t be able to afford it, and home values are NOT going to double in the next five years. You will still have an upside down home where you owe more than it is worth?

A modification that doesn’t solve the problem, or leaves you living paycheck to paycheck is a BAD DEAL. The goal of a short sale is to offer you a NEW BEGINNING or a FRESH START. Don’t chain yourself to a massive pile of debt by accepting a home loan modification that doesn’t help you rebuild your life and your future wealth.

While nobody wants to sell their home, the fact remains that millions of Americans have discovered that loan modification programs are a complete waste of time.

For more information, contact The ODea Group for a FREE, no-obligation, consultation.