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Yes, lenders are doing loan modifications under the current administrations Home Affordable Modification Program.
If you or anybody reading is considering a loan modification, be prepared for a substantial drop in your credit score. Now, if you are behind on payments, this is not a huge deal as your credit is already in trouble. However, some homeowners have seeked and received loan modifications just to find out afterwards that their credit score would drop even though they never missed a payment.
Bette
I've applied to Wells Fargo (holds my mortgage) plus various other lenders, since 12/08, to lower my interest rate. I'm getting no where! Homes, (I'm in GA) everywhere, have lost value, but the lenders are INSISTING on me getting an appraisal. It's a no win solution! I've spent $350.00, on 2 different appraisals, only to be told what I already know, "Home values have dropped, and your home doesn't appraise for the principal amount owed" Is this the the way the banks are using their 'bailout' money? I've written to my Congressman, many times over this, plus have filed charges against the appraisers with the GA Realestate/Appraisers Board to no avail. I will have my voice heard on this, and hope that you will get your loan modification. If you do so, please advise me ASAP. Tnx pocketspc
There are very specific terms to the Home Affordable Loan Modification. Last week a scathing report from the GAO came out, saying lenders were not doing their part - that they were only assisting those behind in their payments. (I suspect they are just overwhelmed and that is all they can handle right now).
But, just because someone is upside down, that does not equal entitlement for a modification. Actually, no one is entitled, this program is voluntary for the lenders.
Well....7/14/09.... Wells Fargo sold $600 million in loans for $0.35 on the dollar, but I don't know if any principle reductions will be passed on to the clients or not!! :-/
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Wells Fargo sold $600 million in mostly non-performing subprime loans to Irvine, Calif.-based Arch Bay Capital, National Mortgage News reported, citing sources familiar with the sale.
"Home values have dropped, and your home doesn't appraise for the principal amount owed" Is this the the way the banks are using their 'bailout' money? I've written to my Congressman, many times over this, plus have filed charges against the appraisers with the GA Realestate/Appraisers Board to no avail. I will have my voice heard on this, and hope that you will get your loan modification. If you do so, please advise me ASAP. Tnx pocketspc
It's not the appraisers fault that home values have dropped! Not sure when you bought your house but you cannot realistically expect your house today be worth the same it was 2 or 3 years ago. not sure if you have noticed the news but everyone is out of work, homes are going unsold. You are right there in the middle of it. If you do find someone to justifiably sue then let us all know who!
Are your mortgage payments (principal/interest/re taxes/insurance/hoa) more than a certain percentage of your monthly income set by the government?
If you make too much money and even if you are underwater, there is no way you will qualify for a home loan modification. Just because you are under water on your mortgage means very little to the loan modification program. The government sets guidelines for the new program which was announced by Obama in March.
Yes, some of the lenders have gotten swamped with request and are very slow to respond to applications for loan mod.
As for loan principal reduction, it's extremely higher unlikely to happen.
I think they will either try to either give you an interest rate as low as 2% and or try to stretch the payments over 40 years.
But principal reductions on primary home loans is next to impossible. The lenders are completely against principal reduction because they are fearful that will set a precedent for future borrowers to try to ask for principal reduction. Their thinking is that future investors will not want to touch these mortgages and interest rates will have to increase tremendously to off set potential loan losses from people asking for principal mortgage reductions.
It is not just the precedent, it is much more convuluted for lenders to just "flush away" portions of assets that could number in the millions and be distributed in dozens of different ways.Even the change in interest caused major headaches for the internal accounting systems of the lenders -- the whole basis of how they manage risk has been geared toward to an entire loan becoming "non-performing" not merely readjusting downward the value and return. If there is going to be meaningful change I fear there will be some unpleasant side effects too...
Last week a scathing report from the GAO came out, saying lenders were not doing their part -
I've been attempting to modify my loan with Wachovia since February 11, 2009. I call in once a week, have updated my docs over 5 times & still nothing! My hours at work were drastically cut & now my income is half what I used to make, only making the ability to pay worse!
I'm really doing the best I can to pay but now am almost three months behind...how long will these people take to make a modification offer??
The modifications I've heard of are temporary in nature. One friend was 'forgiven' 4 payments due to temporary disability (heart attack); however the principle is not reduced and he is way underwater (800,000 house; house next door foreclosed and sold for 400,000), and the payments 'forgiven' were just pushed to the back of the loan. He will eventually walk away from it.
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Loan Modification principal reduction
