To all the nay sayers who say the new government programs for mortgage loan modifications are useless, I have a success story! A friend just did a successful mortgae loan modification. Her lender had been Countrywide (now Bank of America).
She had not made a payment since September 2008 and had moved out of her house. To her surprise, in early May of this year, the lender called her and asked if she would be interested in doing a loan modification. Happily, she submitted W-2’s and tax returns to prequalify.
Upon review of her income, the bank reduced the payments down to 31% of her income. Her payments dropped from $2600 to $1200. In addition, 25% of the principal was forgiven and interest rate dropped to 2.2%. The interest rate will rise to 3% at the end of the first year and 4.4 percent at the end of the second year. She is required to stay in her house for 2 years.
She did not use a professional company (I advised her against that), and spoke directly to the customer service reps at the mortgage company. In addition, the mortgage company agreed to bring her account current on her credit report. How can you beat a deal like that?
How you can get in on the program and what to expect if you are accepted:
- Call your lender if you’re behind on payments, or even if you’ve moved out and see if you can qualify for the program. Ask for customer service.
- Most likely, they will pre-qualify you over the phone.
- If you pre-qualify, you will need to submit your last 2 years tax returns and W-2s.
- You will sign new paperwork on the loan, because loan terms have changed.
- Be cautious of anyone who contacts you and demands up front fees, lenders are not asking for any money up front.
Loan modifications are happening! Just don’t use a professional service. The official government website is: http://www.makinghomeaffordable.gov.
Anyone else out there done a successful loan modification? Leave a comment!
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I think this is complete utter BS on part of the US Government! Why is it that I struggle to pay my bills to remain current and on time to get a 5% mortgage, when some joe blow says Screw it and gets a 2.2% interest rate up to 4.4%? and does not have to repay the 25 % of the forgiven principal? This is WRONG! What is the government going to do for people like ME?
Because WAYNE…If she and others continue to default on properties you will continue to pay for a property that will continue it’s downhill slide until you owe 150% on your mortgage and begin to think about how to bail. It’s called market stabilization and benefits everyone.