Mortgage modifications are proceeding slowly, and while some homeowners have been able to benefit greatly from them, many others are being hurt just by trying to achieve them.
As a recent series of articles on CNNMoney points out, some homeowners in distress are able to have some or all of their debt forgiven, or have their interest rates on their mortgages reduced to as little as 2% fixed for the remaining life of their loan.
Getting those modifications can be very difficult, however–according to Treasury Department statistics, only 4% of homeowners in distress have been able to get permanent modifications to their loans.
One key word in that statistic is “permanent”. Many lenders are currently putting distressed owners in “trial” modifications, to confirm that the owners can at least make the new, smaller, payments–but during that trial period, the owners are technically not making their full payments, which is in turn causing them to be reported to credit bureaus as delinquent; the end result is that borrowers who are in good faith complying with lenders’ modification plans are finding that they’ve ruined their credit history.
Anecdotally, we’ve found that owners who retain professional help to negotiate with lenders on their behalf tend to have much better results in terms of getting their modifications approved. Those modifications often do still result in damaged credit (often because of deficiency judgments obtain against the homeowners, or “P&L loss writeoffs” that the lenders declare on the homeowners’ credit reports), but for some owners they can still be worth it if they result in avoiding foreclosure or bankruptcy.
If you’re contemplating a loan modification and would like to first explore your options for a traditional refinance, we may be able to help; we can also provide you with referrals to lawyers and negotiators who can help you with your loan modification, bankruptcy, or short sale. If you’re interested in any of those services, please fill out the form below and we’d be glad to assist you.
Loan Modification Request
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Tweets that mention Mortgage modification overview « Ethical Homes -- Topsy.com
on Jan 4th, 2010
@ 9:31 pm:
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Andrew Pelt
on Jan 7th, 2010
@ 1:59 pm:
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