Loan mod, how low will they go?

[plantlvr]

Was wondering how low a mortgage company will or can go in reducing monthly payments? I would love to be able to stay in my home if the payments were half of what they are now

[HHM]

The best program I have seen (but I have not seen them all) with regard to modifying your payment is where they reduce your interest rate to 2% for the 1st year, 3% for the 2nd, etc. up to a fixed 6% thereafter.

You can sometimes get a 2-4 month temporary reduction in payment. But the above program is the only long term payment adjustment I have heard about.

It is probably unrealistic for your to expect the lender to cut your payments in half for the life of the loan.

[plantlvr]

Thanks HHM, I didn't think so, but i was wondering.

[Trixie007]

I believe the loan mod we did reduced our payment by 800-900/mo - about a 1/3 reduction. Somewhere around there anyway. Still didn't make sense to try to hold on to the house, being so upside down.

[plantlvr]

Thanks Trixie, my payment is 1,575.00 and i only bring home about 2,250.00. So if I didn't eat or pay for utilities I'd be set!

[hereforinfo]

What kind of loan do you have (ARM, pay option, etc.)? Has your rate gone up, or is this the amount your payments have always been? Have you had a reduction in income? These are all things that will determine if and how much they will modify. At most, they might offer to extend your loan to 40 years and lock you in at a fixed rate. Currently banks are not reducing principal.

[Trixie007]

What kind of loan do you have (ARM, pay option, etc.)? Has your rate gone up, or is this the amount your payments have always been? Have you had a reduction in income? These are all things that will determine if and how much they will modify.

Hmmm... maybe not always the case. We did have an ARM, but still had a few years left at the fixed rate, our payments hadn't changed and they didn't ask for any documentation on income or expenses in order to do the modification. I think since every lender is different and every borrower is different, no one can really say what a lender would do for someone else.

[slam22]

I believe that until the mortage companies actually reduce the principal amount of these loans that the majority of these modifications are doomed to failure. I would love to get a loan modification on our home but when the property is 300k upside down lowering our rate doesn't really change anything.

[roozterdvx]

After countless attempts of trying to achieve a loan mod, we decided to include our home in our Ch.7 BK filing. We were hoping to get a mod done before we filed but it didn't work out for us.

Our lender, (Wells Fargo), gave us a run-around for months. We spoke to many different people, filled out work sheets, sent letters of hardship...always the same answer...nothing they could do at this time.
We asked about "Help 4 Homeowners" program through HUD. WF said they are a participating lender and would send us some paperwork. Same forms and worksheets we had previously filled out...sent everything back...again...nothing.
Finally, after deciding to include our home in the ch.7, we told Wells Fargo about our decision, (they called looking for a payment of some sort).
Within a few days of informing them, they sent us a package.
The proposed "loan modification" took all penalties, late payments, etc. and added them to the end of the loan which would bring the loan current. It also lowered our rate slightly, and extended the term of the loan to 40 years from the date of signing.
All of this would lower our mortgage payment by about $400.00 per month.

We are so upside down in this house that we decided not to go with the mod. We would be locked into this house for who knows how long before we saw any equity and be able to sell and move if we needed or wanted.

Also, after telling GMAC, (secondary mortgage lender), that we were including our home in a ch.7 bk, they sent us an offer...
...we owe almost $50,000...send in $5,000 in certified funds and the account would be fully satisfied and posted as paid in full.

Good luck with your attempts at a loan mod. I hope you are succesful.
For us, the mod isn't workable...we just owe too much over what the house is worth and the employment market is in worse shape than the real estate market.

[mgdebt]

Hi Rooster,

When you told your 2nd that you were including the house in the BK7....Had you actually filed BK7 yet? Or were you just in the planning stage at that time? I would like to settle with the 2nd if I could, but not sure if they will play ball if I haven't filed yet.

Thanks!

[cityish]

I believe that until the mortage companies actually reduce the principal amount of these loans that the majority of these modifications are doomed to failure. I would love to get a loan modification on our home but when the property is 300k upside down lowering our rate doesn't really change anything.

I feel the same way.

I paid $120k for my house 10 years ago and right now have a short sale being negotiated for $125k. Which really irks me considering the blood, sweat and tears I put into that stupid shack... raided my 401k and cleaned out my savings to pay the handyman, electricians and plumbers, etc.

Chase won't modify my loan down to $125k but they'll consider letting a stranger have it for that. What do they care?

If the short sale goes through then someone's going to get a really good deal!

[Flamingo]

I feel the same way.

I paid $120k for my house 10 years ago and right now have a short sale being negotiated for $125k. Which really irks me considering the blood, sweat and tears I put into that stupid shack... raided my 401k and cleaned out my savings to pay the handyman, electricians and plumbers, etc.

Chase won't modify my loan down to $125k but they'll consider letting a stranger have it for that. What do they care?

If the short sale goes through then someone's going to get a really good deal!

Cityish - everyone is in the same boat, whether doing OK financially or in financial dire straights as to their mortgage and house value. As you, people purchasing a house 10 or so years ago are maybe looking at a house valued not much over what they owe or less if they took out a second mortgage to do house renovations. The American Dream just went down the tubes for everyone and those in serious debt having to file just may not be able to afford to keep the house even after any modifications are offered. You have to qualify for these modifications and if you are without a job and/or lost income, it's an impossible situation. Then there are those struggling with 2 to 3 jobs just to continue to keep their house so they don't go under hoping to get through this economic crisis and avoid losing their home. It's bad for everyone. There was a great show on TV late last night (one of the news channels) about the entire mortgage crisis and how it all came down to this point after 9/11. Mortgages were being given to people that had no income to actually pay for a house just so they could have a house. All that has affected everyone now and you just have to do what you have to do to survive and get through it.

[roozterdvx]

Hi Rooster,

When you told your 2nd that you were including the house in the BK7....Had you actually filed BK7 yet? Or were you just in the planning stage at that time? I would like to settle with the 2nd if I could, but not sure if they will play ball if I haven't filed yet.

Thanks!

We haven't filed our ch.7 yet. Had to wait for our income tax refund.
We just recieved our refund check last week and will be dropping all our paperwork off with the attny this week.

Basically, after paying the attny retainer fee, we started telling any creditors who called that we were preparing to file ch.7 and we had retained a lawyer, gave them the lawyer's name and number. Some creditors told us that they would continue to call occasionally to check our status until we actually file, and GMAC, our 2nd, actually called a couple of times. We gave them the same answer as before...our situation hasn't changed and we are still filing ch.7 with the house included and gave them the attny name and number, (only because it was a different person each call).

The offer from GMAC to settle came in about a week ago.

Hope this helps.