Modifications,Short Sales,Deeds in Lieu,WriteDowns

WARNINGS about Modifications

Posted on Sunday, March 29, 2009

Two things I want to be aure everyone knows. First, under some of the new bailout related plans, the modifications you may enter may only last for five years. After that you're interest rate will adjust back up to whatever the market rate was at the time you made the modification (which is around 5 percent on a 30 year fixed mortgage right now). So in addition to the rate and payment you get under a modification make sure you know and understand what your rate and payment will go up to five yeears out.

Second, many folks are telling me that when they request a modification from their lender now what they are getting is not really a modification. Many lenders are giving a 3 month "forbearance." This is merely a 3 months period during which the lender will not move forward with the forelcosure action (though they will not dismiss it altogetehr either). During that time the lender expects you to get current on past due payments (watch out for the last of the 3 payments, sometimes they're putting the entire balance of everything past due which everyone knows you won't be able to pay). One more IMPORTANT thing, often the document the lender gives you to sign also contians (a) a waiver of important rights you may have and (b) an admission by you that the total amount the bank says is past due (which will no doubt include attorney fees, late fees, default interest, etc) is indeed what you owe - DO NOT AGREE TO THIS UNTIL YOU SEE AN ACTUAL BREAKDOWN OF THIS NUMBER AND CAN VERIFY IT IS CORRECT.

Any questions, just email me - click the "contact" tab at the top of this web page. Good Luck!


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Comments

This is precisely what happened to me at Countrywide. They closed my access to HELOC, presumably due to sevely diminished property value. I am afraid to sign their paperwork which arrived FedX, since I have no confidence in my ability to pay $300 more on my monthly mortgage payment. Countrywide insists my mortgage is no Fannie Mae and there fore ineligible for any other considerations.

Janis Marie 4/8/2009
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