Loan modification?

[Pennstater]

I'm hearing more and more ppl that had their mortgage loan modified. During the process they did not pay any mortgage for a few months. One friend's payment is half of what it was.

I"m no financial genius, so is the bank just lowering the rate and taking the loss?

What about me, I"m paying on time, but would LOVE to pay half the price too?? Are they rewriting the mortgage for another 30 years? Must one be in "bad shape" as in low income and a high payment in order to qualify?

I think it's not fair to the rest of us? thoughts?:sad:

[ILv2Shop]

Bumping...

[DebK1013]

When you do a loan modification you refinance with the same lender, and can modify the terms of your original loan. You can lower your rate and lower or increase the length of your loan.

In NY you only pay mortgage tax on the "new money". Meaning if you borrow $100,000.00 and the principal balance on your old loan is say $95,000.00 you pay mortgage tax on $5,000.00 when recording the mortgage and consolidation extention modification agreement (CEMA) in the County Clerk's office. You can roll in your closing costs and get money out from the equity of your home. If you can get a better rate and adjust the length of the loan to help then its a good idea. If you only have a few years left to pay it wouldnt be worth doing it.

I don't know if other states have mortgage tax but we do. As far as the couple months of no payments. There is a recission period after your close on principal residences which is 3 days. During that time you can cancel the loan. Once you come out of recission your first mortgage payment will be 2 months after you refinance. So if you refinance in December your first mortgage payment will be in February.

Hope this helps clear things up and makes sense! lol

[TBEventer2002]

We did this a few months ago. We went from $720/mo to $650/mo. Not huge savings, but that $70 is helping towards some smaller personal loans. We had two months where we didn't have to pay (was VERY nice to get ahead on some other stuff!). However, as soon as the paperwork was done, they sold our loan to a company that we LOATHE. We are having terrible customer service with this new company on several issues we have run into the past two months! Grr...

[DebK1013]

We did this a few months ago. We went from $720/mo to $650/mo. Not huge savings, but that $70 is helping towards some smaller personal loans. We had two months where we didn't have to pay (was VERY nice to get ahead on some other stuff!). However, as soon as the paperwork was done, they sold our loan to a company that we LOATHE. We are having terrible customer service with this new company on several issues we have run into the past two months! Grr...

$70 x 12 is $840. Thats a mortgage payment. Great savings.

[Macaela25]

I've looked into this, but again, it looks like the responsible people get left in the cold. We have never had a late payment and can afford our payment (as long as both of us work), but we'd certainly like to lower our interest rate by the 1% we qualify for with near perfect credit. Since our home lost value (along with everyone else in Florida) we are upside down and no one will talk to us. Our rate is 5.785%, but it just aggravates me to know that it could be so much lower.

[~Jess~]

When you do a loan modification you refinance with the same lender, and can modify the terms of your original loan. You can lower your rate and lower or increase the length of your loan.

In NY you only pay mortgage tax on the "new money". Meaning if you borrow $100,000.00 and the principal balance on your old loan is say $95,000.00 you pay mortgage tax on $5,000.00 when recording the mortgage and consolidation extention modification agreement (CEMA) in the County Clerk's office. You can roll in your closing costs and get money out from the equity of your home. If you can get a better rate and adjust the length of the loan to help then its a good idea. If you only have a few years left to pay it wouldnt be worth doing it.

I don't know if other states have mortgage tax but we do. As far as the couple months of no payments. There is a recission period after your close on principal residences which is 3 days. During that time you can cancel the loan. Once you come out of recission your first mortgage payment will be 2 months after you refinance. So if you refinance in December your first mortgage payment will be in February.

Hope this helps clear things up and makes sense! lol

I believe she is referring to a mortgage modification, not a refinance. We recently modified our mortgage under Obama's new "Making Home Affordable" program. There are no closing costs, new money, or rescission periods like there are in a refinance.

In order to qualify for Obama's program, your payment on your first mortgage must be greater than 31% of your gross income. You must also be suffering some sort of financial hardship or have a "predatory loan."

For us, my dh had a 15% pay cut and our oldest son was diagnosed with autism last year and the medical costs are not covered by insurance. Our payment was approximately 42% of gross income. They lowered the interest rate to 2% for 5 years, 3% for the 6th year, 4% for the 7th year, and 5% until the loan is paid off. They also extended the term of the loan for an additional 2 years. Many people are having to have their loans extended out to 40 years, but luckily we didn't have to do that. Most of us who qualify also owe much more on the mortgage than the home is worth, so it's in the bank's best interest to modify the loan rather than foreclose. I owe $258k and my house is worth closer to $170k.

If you think you may qualify, then you can read more info about it here:
Making Home Affordable - Home Affordable Modifications

It does take, on average, 6-10 months to get a permanent modification. Ours took from March 4th (docs first submitted to mortgage co) - November 17th (modification made permanent).