QUESTIONS?

CALL US: 703-319-2198


The Problem with Loan Modifications and Lenders Addressed.

Published on Mar 04, 2013 | Short Sales Debt Mitigation solutions for underwater properties Loan modification modify your loan with your lender

People often complain about the difficulty in obtaining a modification of their loan to achieve a more affordable payment.    The fundamental problem that exists is that your mortgage lender that you make monthly mortgage payments to is often not the investor behind your mortgage. The investor or otherwise real owner of your mortgage is another entity or consortium altogether. I would like to describe the conflict that often interferes.

 
The lender or servicer that receives your monthly mortgage payments can be characterized as the toll booth. They handle the monthly account maintenance and follow your investor’s instructions but I would not assume that they have incentive to satisfy your wishes for a more affordable mortgage payment. The Servicer gets paid every month whether you succeed with a loan modification or not, just like car passing through a toll booth.
 
The actual investor on your loan must agree to a reduction in terms and a path to a suitable work out in order for the servicer to issue you a revised set of mortgage terms. This requires a lot of nonsensical inefficient back and forth committee work between the Servicer and the Investor. The Investor has thousands of loans and they often have the attitude that you signed the mortgage note and, therefore, you should find a way to pay the money. Unless they can really see hardship that would adversely affect them as the Investor based on their cost basis in your mortgage, you will often fail with your loan modification efforts. More often than not, you will be approved for a Loan Modification only to end up with modified payment terms that exceed your original terms. You may also find that your loan balance is much higher than previously.
 
Loan Modifications are traditionally not fair nor do they offer more than a short to intermediate term benefit if you are fortunate enough to secure one that makes sense. Know this, and also be aware that Loan Modifications and associated disclosure to your Servicer can pose risk. Your lender is under no obligation to satisfy your demands and they can and often do use information from the modification process against you. I have never been an advocate of Loan Modifications as being a fair and equitable solution.
 
Blogging form the front line of the housing crisis.
 
George Omilan
NMLS#873983
 
Please comment and share this blog if you like it.

Recent Posts

Blog Tags

Reverse Mortgage HECM Reverse Mortgage Retirement Planning supplemental retirement income Seniors Retirement security Short Sales Financial Planning Traditional Mortgage Home Care Age in Place Jumbo Reverse Mortgage lifetime income with a Reverse solutions for underwater properties Government insured mortgage Long Term Care Retirement income insecurity Social Security HECM for Purchase home equity access forgiven mortgage debt Debt Mitigation private label reverse mortgage Non QM reverse credit line mortgage Investor Loans mortgage debt forgiveness act Eligibility for Reverse Mortgage Specialized Forward Mortgages Mortgage Loan Process VA LOAN FHA HUD Annuity Loan modification Real Estate Investment Loans foreclosure cashflow self-employed borrower bank statement loan 55+ Reverse to Purchase Mortgage Financial Assessments No Doc Investor Loans Jefferson Mortgage Group Interest Rates HECM Changes investor financing Inflation VA Low Score Reverse Mortgage Eligibility manual underwrite Construction Loan Fed Real Estate Economy HELOC Lending Limit increase DSCR 2025 changes QM mortgage debt relief act Housing Market Mortgage Deliquency Non-recourse loan modify your loan with your lender Fiscal Cliff Mortgage Rates Senior Advocate Medicare Real Estate Market Sandwich Generation Jumbo Reverse Second Trust mortgage debt Diversification Low Credit Score Estate Plan Senior Care Inflation Rentership Credit Score down to 500 Second Trust Gray Divorce Jumbo Mortgage Loan 2023 changes growth factor downsizing bankruptcy MIP Hard Money Loan Trump Principal Limit Factor Debt Treasury DSCR Commercial Real Estate 2021 Changes FINRA Housing Prices Business Cash-flow Property-based loan Residual Income Asset Qualifer HECM to Purchase OBBBA Asset Based Mortgage Home improvements Blanket Loan Second Trust Prequalification Non-Qualifying Loan Unrestricted Approval success story High-Value Homes LESA occupancy requirements ATR Rule assisted living LLC Seller Contribution