Can a loan modification really help you?
Wednesday, 23 September 2009 01:24
Atty. Raymond Bulaon
A RECENT article in USA Today revealed that tens of thousands who have modified their mortgage loans are actually winding up with higher monthly payments. Why is this so? Isn’t reducing your payments to make them more affordable the whole purpose behind doing a loan modification?
At this point, it is not clear whether the above is likely to continue under Obama’s $75 billion initiative to get lenders to reduce monthly payments for homeowners in trouble. The article goes on to say that currently, there are approximately 360,000 mortgage modifications in a 3-month trial period and of course, there is no telling how many of these mortgage modifications will ultimately be successful. If you have applied for loan modification and you are currently in this 3-month trial period, your modified payment will be more or less the same as the "trial period" amount. If you can’t even pay this amount, your mortgage modification may be a failure from the start because chances are that you will default again in the near future. In other words, the modification may have helped a bit but it hasn’t really solved your problem because you still can’t afford the modified payments.
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