Cash is King – Upside Down Mortgage Solutions

August 28, 2008

Loan Modification: Do the Terms Favor You or The Lender?

Listen in on a Interview I did on Loan Modifications and the

Fannie Mae and Freddie Mac Streamline Loan Modification Program



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.



  1. Not bad buddy!

    Comment by Dave — September 3, 2008 @ 6:39 am | Reply

  2. You do know that you can stop foreclosure, yourself, right?

    Why pay someone to do what you can do yourself?

    Stopping foreclosure is easy, if you know what to do.

    Comment by Kevin — September 4, 2008 @ 2:28 am | Reply

  3. I have 2 loans with Indymac,due to a reset my payments went from 2,100 to 3,500 called Indymac they offered a f2m forbearance plan(what is this)they said my rates would behind payments would be placed on the end of loan.i asked about the FHA releif modifcation.indymac said it would not take place till oct of this year.oh by the way i`m 150,000 upside down with a credit score of 750 please help

    Comment by Terry — September 11, 2008 @ 4:30 am | Reply

  4. […] Upside Down Mortgage:Getting Your Bank to Work with You Filed under: Foreclosure, Loss Mitigation Negotiation, Loss mitigation, Upside down mortgage, mortgage, refinance — brentlane @ 3:28 pm Tags: Bank Phone Numbers, Foreclosure, loan modification, Loss mitigation, mortgage, Short Sale, Upside down mortgage Read more about a LOAN MODIFICATION […]

    Pingback by Upside Down Mortgage:Getting Your Bank to Work with You « Cash is King — September 14, 2008 @ 5:33 pm | Reply

  5. I work in the loan modification industry and this is typical. Banks are always out to make a buck. Take my advice and hire a GOOD company to give you terms that are in YOUR favor. I’ve got a simple run down of a good loan modification workout on my Mortgage Modification page under the “Services” section if you want to see what methods a legitimate company uses during your modification negotiation.

    Comment by Mortgage Modification — September 18, 2008 @ 1:25 am | Reply

  6. Hi,

    I am looking for some advice.

    I have had a townhome in Fl (my only property) since 2005. I felt that the mortgage was too costly and I refinanced in 2006 with a four option arm loan from countrywide. After refinancing I got married and my husband bought a home in NJ. So I have a tenant that is two months behind on her rent and my mortgage payments shot up b/c I was only making the first option payment waiting for the perfect time to sell. So now my mortgage payment is really high and I lost my job plus the tenant won’t pay. How can I get rid of the house without affecting my husband and be in huge tax trouble. By the way I should have never qualified for the mortgage in the first place.

    I have alerted the bank that I have four months left of unemployment.

    Any insightful information would be helpful.

    Comment by Dorothie — October 11, 2008 @ 3:34 am | Reply

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    Comment by Caren — October 14, 2008 @ 7:43 am | Reply

  8. What Is Loan Modification And How It Can Help Homeowners

    We’re all experiencing hard times. The economy went down the drain and most of us can’t afford to pay our bills nor our homes. Credit card companies tightening up their regulations and so mortgage companies, so we can’t fix an adjustable interest rate to get a more affordable mortgage payment. Also some of us are loosing their jobs on top of it, so how we can change it?

    First of all I personally think that we can change it by being strong and patient. Of course being patient and strong will not put money in your pockets, but it will definitely keep your health and your hope in order.
    You have to understand that probably 90% of the population in America and the whole world is experiencing the same problems as you do.

    So what is loan modification?

    While you’re struggling to make your mortgage payments due to economic changes, the banks and the government developed programs that can help you. The government has many reasons to help homeowners, some of the reasons are:

    1. Try to stabilize the economy so it will not crush completely.
    2. Banks approved so many bad home loans.
    3. Greed in Wall Street, as well as bank ceo’s and owners.
    4. Government couldn’t oversee financial crash
    5. Innocent and not innocent homeowners that took loans they couldn’t afford from the beginning.

    Ok now back to the loan modification process, what is loan modification? Loan Modification is a adjustment of an existing mortgage a homeowner have, it can be with a government loan or a bank loan. Let’s say you had a 6% interest rate on your mortgage that was matured and now the interest rate have changed to 7%. Now it’s harder for you to make the payment due to increase in the payments and the fact that your job don’t pay you the same as before. This is a perfect example of an average homeowner in America today. So what do you do?

    There are two different ways you can go with. You can do it your self or higher a professional mortgage modification broker to do it for you. Let’s assume for a second you do this your self, what are the steps to do it your self?

    1. You contact your bank
    2. You will ask for the loss mitigation or collection department.
    3. Give them a brief of your financial background today- expenses and income.
    4. Write a hardship letter. You basically tell them in the letter why you can’t make the payments.
    5. They would want to see also some bank statements or pay stubs.

    After talking to you on the phone they will process everything you’ve submitted to them. They want to make sure that this time if they will lower your interest rate and make some adjustments for you, if you could make the payments in order without defaulting on the loan. This process is almost as qualifying for any loan, so you need to know how to qualify your self with no mistakes. I would definitely recommend hiring a professional to do this for you, since they know the market and how to make things happen to you in a legitimate way of course.

    The process of a loan modification approximately can take up to 3 months, but it’s definitely worth it. You can get a much better interest rate on your mortgage and some banks can also reduce your principle. That’s right, you can also lower what you owe on your property, but you will need a very good reason to do that.

    There are some mortgage companies and law firms that help homeowners and real estate investors with loan modification. I think that you definitely need to contact a professional do this for you. Be careful from scam artists, because for this service you normally need to pay up front and there are many people out there that will take your money and will not deliver what they’ve promised.

    Good Luck.

    Yanni Raz
    mortgage modification and loss mitigation help

    Comment by unown — October 22, 2008 @ 7:18 pm | Reply

  9. I am writing because I am in need of some help. I bought my house for 285000 in August 2006 at the peak of the market. I am paying $2103/month on an interest only loan at 7.625% that will adjust in 2011 to 13%. My house is now worth $250,000 and my wife and I are very strained financially as a result of two new children and the increase in cost of everything. I am have been trying to mofify the terms of my loan for 4 months but do not seem to achieving much. i wonder if it is possible to get the negative $35,000 writen off by my mortgage provider as well as offer me a better and more affordable interest rate.

    Comment by Andrew Kay — October 30, 2008 @ 5:15 pm | Reply

  10. […] start the Loan Modification Process you simply need to email me at […]

    Pingback by Adjustable Stated Income Loan: How to Handle the Adjustable Part « Cash is King — December 4, 2008 @ 12:42 am | Reply

  11. […] There is a lot of talk these days from all lender, the FDIC and both Fannie Mae and Freddie Mac with regards to mortgage loan modification.  I think its great that these companies and institutions have stepped up to help homeowners but I have also found that many mortgage loan modifications can be potentially dangerous.  You can find out more information on that topic in this post on Mortgage Loan Modification Terms. […]

    Pingback by Mortgage Loan Modification: FDIC, Fannie Mae and Freddie Mac Are Here to Help Homeowners. « Cash is King — January 9, 2009 @ 5:09 am | Reply

  12. Thanks for the update! Very helpful post as usual. Tomas

    Comment by Mortgage loan modifications — January 30, 2009 @ 10:11 am | Reply

  13. The requirement that a borrower who receives a loan modification cannot later file a bankruptcy is not enforceable under current bankruptcy provisions. Don’t be fooled by this. It’s BS.

    Comment by peter klika — June 10, 2010 @ 7:28 am | Reply

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