Is a Loan Modification Right For You? | Carson | Short Sale | Leesa Hammond

Have the circumstances in your life changed whereby you can’t make the payments? Job layoffs, reduced hours which equates to reduce pay?  Now, you can’t afford your mortgage payments and you are desperate for a solution.

The interesting fact is the banks and the federal government would love for you to believe that a loan modification is the end all to put you back on track to stabilizing your finances.  So, let’s examine why you can’t believe them:

Jeopardizing your credit rating

Generally, most banks will tell you to be late on your payments. Interesting.. This is such a catch 22 trap that can put you in a very difficult position by lowering your credit score.

After the initial review, you still have to make timely payments dunring the “trial period”.

Let’s see.  Is this a scam or what?  You just submitted all your financial documents, the bank supposedly approves your loan modification for a “trial period”, then tell you that part of the approval requires 3 monthly payments which the final modification documents are being prepared.  Really?  Are you kidding?  Okay, so now you made your 3 trial payments and what happens? A letter or call is received from your bank saying they are still reviewing your application. So, continue making your trial payments. Let me ask you.. does 3 months seem realistic for any normal business to resolve any issue with client? I would think that a business would want to resolve client issues within a month. y resolve any issue within a month. If they really wanted to help you, why not process the loan modification sooner rather than later?

Loan modifications is not the resolution to the problem.

Let’s say that you receive a loan modification, you are making payments on a house that is worth less than what you owe.   A reduction in the prinicaple amount does not happen with a loan modification, the bank merely reduces the interest rate.  Let’s say you owe $300,000 which is the amount you must pay back even if the house is worth only $230,000.  That explains why over 70% of loan modifications fail.