I honestly want to meet the family that has executed the "Greatest Loan Modification in the World." Their payments were reduced and the graduated payment increases are truly working for them. I'm a notary signing agent as well as a Realtor. A notary signing agent is a mobile notary that specializes in notarizing signatures on loan documents. Here are some things I found out about loan modifications:
Repayment plans only work well if your financial set back is TEMPORARY because it requires you to have money, just not all of it. This option requires that you are back to the point where you can pay your mortgage and then some. Unfortunately, lenders will not automatically set up a program to bring deficient loans up-to-date. The homeowner must put the plan into motion and provide the lender with the documentation they require to analyze your financial situation. Although lenders do not want to foreclose, they do want to make sure whatever plan to bring accounts current is followed through on.
Many borrowers who have applied for a loan modification were SURPRISED to find out that their mortgage payment actually increased with the new loan terms!
How can this happen? Well, for borrowers who had interest only loans or negative amortization loans the result of converting those into fixed rate plans where principal and interest are included often resulted in a HIGHER monthly loan payment.
A beneficial loan modification will offer a very low interest rate-perhaps as low as 2%-for at least 5 years and then GRADUALLY increase until the rate caps at about 4.875%. Also, the BEST case scenario is when the loan balance is actually reduced to reflect the homes current market value.
Loan modification terms to WATCH OUT for include a temporary “repayment plan” or a balloon payment after a certain period of time.
Let me know if the Home Affordable Modification Plan (HAMP) is working for anyone out there.
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