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
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
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
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.