QUESTIONS?

CALL US: 703-319-2198


Loan Modification - Understanding Forbearance

 The Loan Modification process can be tricky.  I personally do not endorse modifications because I do not believe that they are fair or equitable for the borrowers. Having said that, the process is fraught with risk and you need to understand what you may be getting into if you choose a Modification over a Short Sale.

Forbearance is the lender’s test of your character in their words.  Why should the mighty lender stoop down and bequeath you with a modification when you signed up for the debt.  You owe them money.  This is the lender’s position whether you want to hear it or not.  The primary goal of the lender is to recover their money.  Forbearance is a tool that they use as part of this process.  

It is very common for a borrower with a $3,000 monthly mortgage payment to be told that they qualify for a Loan Modification but before one can be granted the lender will require the completion of a four month Forbearance period. This is a period that may require a significantly higher payment like possibly $4,000 or even $5,000 per month.  If you demonstrate the ability to make these payments, on schedule presumably, the lender will reward you with a Loan Modification based on the character you have demonstrated in paying them the extra money.

The forbearance money you pay is applied to your total amount due on your loan but you have to be aware that even after you complete the forbearance period it is not uncommon for the lender to renege on their verbal offers of a loan modification. Many unsuspecting borrowers with underwater properties and payment affordability issues have discovered this deceit.  My suggestion is that before you agree to any form of forbearance as part of a Loan Modification you think it through completely and understand that the lender is not obligated to grant you a loan modification.  Please beware and don’t allow yourself to be taken advantage of.  
 
Blogging from the front line of the housing crisis.
 
George Omilan
 
 
Please comment and share this blog if you like it.

 

Comments

Error:
Please enter this text

Comment Submitted!

Recent Posts

Blog Tags

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