Piggybankblog posted on 03/06/13
“Dear Steve, Proposed Loan Modification-Only 17 dollars less than my original mortgage. Why?
I have been trying to get a loan modification with Bank of America for 4 years now. I kept getting the run around and it seemed every time I called I got the same old story-the paperwork has expired and must be resubmitted.
I went through this for at least 4 years. I finally got a packet via Fed Ex telling me I have been approved for a modification.
At first I was happy but then I continued to read. My original mortgage was 1,037.00 a month. The proposed modification tells me I will need to make 3 consecutive payments of 1,020.47 beginning April 1 and then the 1,020.47 will be my new modified payment.
That is only $17.00 less than before. I thought modifications were supposed to help reduce a payment to a more reasonable amount.
My loan has a ridiculously high interest rate at 6.95. I am very hesitant to agree to this since I can’t possibly make that payment on my bring home income. I am very discouraged and wonder if I should do a deed in liu and bail. — Susan”
Let me be blunt for a moment. You have no “right” to a mortgage modification and no bank is required to modify your mortgage.
Overall the mortgage modification programs out there have been a joke. Except for some people which received meaningful reductions in their mortgage amount owed, the majority of people received little significant help.
All banks that consider mortgage modifications run your conforming application through their modification policy and procedure. What it spits out on the other side is what they generate.
Mortgage modifications are not supposed to help reduce a payment to a more manageable. They are supposed to meet the internal program the bank agreed to. There are a couple of federal programs (links below) that if you are eligible for, may help.
I would suggest you immediately contact a HUD Housing Counselor and discuss your specific situation. Their services are free to you and subsidized by the government. They have experience with the programs available and can advise you if there is a more suitable program for you.
If your home is unaffordable a strategic default, where you walk away from the house and file bankruptcy, is always an option. But you’d have to evaluate that based on the dollars and cents of your specific situation and if it makes sense for you at this time to take advantage of the legal fresh start and second chance you are entitled to.
If that is something you’d like to explore then I’d suggest you click here to find a local bankruptcy attorney and talk to them for free about your specific situation. Get the facts and then you can make an informed and educated decision if bankruptcy is right for you.
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