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Originally Posted by dhanu86
I am seeking some advice about a loan modification and helping my mom save our house. My mom is seeking a loan modification for our house and she has a FHA loan. About 2 years ago my mom stopped making payments and the bank gave her a forbearance plan where she only paid half of the regular mortgage payment. She was on that plan for two years. During this time she applied over and over and over for a loan modification. The bank always came up with an excuse to why the loan modification was denied, such as the papers were received late or she didn't make enough. She applied like 20 times. The forbearance plan was for two years and now it is up. The bank told us that the house is in foreclosure but we didn’t receive any letters saying that.
Now the bank has come up with a plan where they reduce $300 a month and extend the mortgage to 10 years, which I think is very little in exchange for 10 more years of paying. So instead of 20 years left on her mortgage, she would have 30years. Can anyone give me advice on what I should do and recommend any lawyers that can help. We don't have much money. Any advice or personal experience is appreciated.
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Daily I speak to people in similar situations - my name say what I do... Let me tell you what is "Most Likely" happening. This is another case where people think their bank is working with them, only becoming a victim....
Your mother - it is very unlikely she is going to get an affordable payment.
First Point - The loan is an FHA loan, lenders are no likely to go below 5% on a modified interest rate (noting their are cases of rates as low as 4.5%). If shew can not afford a payment @ 5%, their can foreclosure and get reimbursed from the insurance company. The M.I. she is paying only benefits the bank not the borrower. FHA loans are the least forgiven type of loans if you get into trouble. Not making the normal payment for two years, the loan has grown.
Second point - the so called forbearance plan paying only half of the regular mortgage payment. I challenge you to look back at her mortgage statements. In the last two years, very little if anything went to the principle. Banks lower the payments so the Mortgage-Taxes and Forced-Place-Insurance, and the Mortgage-Insurance can be paid. They send you a notice she was denied and a bill for all the interest not paid in the last last two years. The definition for Forbearance is a payment plan. Now they are raising the payment $300 for 10 additional years.
Third point - (answering your question) Since she is working with the bank directly - there are very little grounds to negotiate. This seems to be a valid proposal. Yes she is going back in time, but she gets to keep to home.
I have heard there has not been enough help with homeowners in FHA loans. Lenders are now being penalized because they cannot afford to take back (foreclose upon) any more properties.
My Mortgage Law Firm nationwide handles modifications (with the exception of California). My advice is your mother continue working with her lender. Basically she made her bed, now she has to sleep in it. It is too late to start asking for legal help now. After she submitted her documentation and the bank has made their decision.
Right now they are offering a way to save the home If you get an Attorney firm (which I am sure they will take your money), there is a good chance what they are offering now will no longer valid later.
I don't know all your (her details), so I cannot comment further.
Good Luck..
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