THIS ARTICLE IS GOOD BUT READ
So I just reviewed a readers Loan Modification Agreement from his lender and it was interesting to see that yet again he was only getting what he asked for and nothing more.
To fully understand what made this unique let me set some groundwork:
1. The Homeowner was more than 120 days behind on his mortgage payment
2. The home was more than $170K upside down
3. He was in a fixed rate loan currently but had a personal set back that caused him to be late on his payment
4. The bank agreed to a modified forbearance and loan modification and the client was unsure about the agreement and contacted me
Now if you were a bank and were out to make money, with absolute disregard for the individual who is struggling, what kind of terms would you think the bank would put together on their Loan Modification?
The OBVIOUS answer is terms that FAVORED THE BANK!
That is exactly what the bank did with this Loan Modification Agreement!
So the Loan Modification agreed to lump all missed payments onto the back of the loan and increase the payments $100 of the existing note payments. They kept the interest rate the same and the term they extended the length of the missed payments.
Now to do this, the bank never agreed to discontinue reporting mortgage late payments to the Homeowner’s credit report. Ironically the loan would have continued to report late month in and month out until all the missed payments were paid in full. At a $100 per month clip that would have taken the client in excess of 6 years, so that would have been 6 straight years of missing payments OUCH!
They also threw in a clause that took away the bankruptcy protection a homeowner has by stating the loan could NOT be included in bankruptcy at any future point. Now 30 years is a long time and a whole lot can happen in that time and to not have that protection moving forward could potentially be detrimental to the homeowner because at some point he may need that protection and not be able to have it because the loan modification would have prevented it.
I can only imagine how many other people out there have signed these kind of loan modifications. They have either been taken advantage of or they got what they were looking for I guess it depends on how you look at things. People keep their home under the banks loan modification terms, win – win?
As always I am here to help so please let me know what I can do to help. Tell me your story and I will see what I can do to help.