Loan Modification Gone Wrong

Posted by Jeff Edmisten on September 13, 2009 // 1 Comments

This morning I spoke with a friend who has a sister thatis a homeowner in the Fredericksburg real estate market.  She was struggling to pay her mortgage, so she spoke to her mortgage company about doing a loan modification.  The mortgage company told her that since she was current on her mortgage, she did not qualify for a loan modification.

The sister was in a really tough situation, she simply couldn’t pay the $1,600 dollar mortgage any longer.  So she decided to become delinquent on her mortgage in an effort to qualify for a loan modification program with her lender.  And she did qualify after she became delinquent.

So, the loan modification was worked, and recently became finalized.  Her payment did change too… from $1,600 to $2,300!!  It went up $700 per month.  So, a woman who couldn’t make her payment to begin with, legitimately attempted to modify her loan to make the payments manageable.  Then she became delinquent on her payments… like she was advised to do.  Only to have her payments go up nearly 44%.  Wow, the bank is really trying to help her.

Now, she is forced to consider her only remaining two options… foreclosure or a short sale.  All of this comes on the heels of some talk by major banks that they are going to be pushing delinquent borrowers to seriously consider loan modifications in place of short sales.  How much faith do you have in the banking system to be suggesting anything in the customer’s best interest?

The point to take away from this is that there are several options for struggling home owners to consider.  Gather all the information you can on the various options… talk with your lender, talk with a realtor who is very experienced in managing short sales in the Fredericksburg real estate market, and consider the credit consequences of each of the various options.  Then make a decision based on solid and trustworthy information.

Category : Blog