Modifying the terms on a mortgage loan! Not necessarily the principal balance, but the interest rate, and repayment schedule.
As reported by Ilyce Glink in her Real Estate Matters Column in the Chicago Tribune last week, some lawmakers feel this is just the tonic to get many distressed homeowners back on their feet in a troubled economy. Others feel it's just delaying an inevitable default by a financially-stressed homeowner by no more than a couple of months or so.
And, often times, loan mods take months for approval, and are often not approved. Even President Barack Obama is getting involved, asking Top U.S. Mortgage Lenders at recent meeting in Washington, to process and approve more loan modifications. The real question - how quickly can they turn them around?
According to recent statistics, roughly 9% of homeowners eligible for loan modification have had their loans modified on a temporary basis within the past 12 months. A far slimmer percentage have had permanent modifications to their existing mortgage loan.
As a general rule, loan modifications are considered temporary for three months, after which they can be made permanent.
But many who receive the Loan Modifications often fall into trouble within a year, and often default once again. Second time around, getting the lenders to agree to changing loan terms is far more difficult, if not impossible.
And those who lose their jobs, or their ability to repay - they are often rejected in the first place.
See our post today via BlogChicagoHomes.com.
DEAN & DEAN'S TEAM CHICAGO
None that I'm aware of.
Most owners who get a loan modification are not even able to make the modified payment on time.
It is a temporary help, most of them end up in a short sale situation. I try to help homeowners through them or sometimes do them for them. But usually it ends up being a distressed listing quickly. Once you get behind it is so hard to get caught back up financially. Like the short sales I negotiate, wiht Loan Mods you have to have to cal, call call.
From what I have experienced, actual modifications are rarity. Lender puts the borrower on a payment plan at the amount that can be paid by borrower for a few months. once that time has expired the lender will either extend the time or notify the borrower that they don't qualify. This is done with the intent to recapture lender losses. Think about this, even if loan is modified say at 4%, payments are calculated at owed loan amount with impounds PITI & MI. and in California we know how high those prices peaked, MOST won't qualify!!!!!!!
Mario Zavala
Century 21 United Realty
What is your recommendation for selling the home during loan modification process? Homeowners that have applied for a loan modification can't list their home. How do we help them during this process? They can only afford home with the reduced payment!
The challenge here is trying to inform/educate them that the intent of the lender here is to recover some of their losses by structuring a payment plan that a borrower indicates that THEY can afford. Let's do a little be honest here, when has a buyer bought something they financed and tell the lender, this is what I can pay and afford regardless of loan amount (in this case 100k's)? I am sure that analyticals will find that RARE occasion just like that RARE modification. What I have done in the past is given the borrower examples of what the payments (owed amount) would be with impounds including MI at different rates. Taking into consideration their income and debt, quite honestly MOST won't be able to afford or qualify at 3,4, or even 5% at those high loan amounts. SHORT SELL IT............GOOD LUCK!
Mario Zavla
Century 21 United Realty
Thanks.