A Word About Mortgage Modifications

You finally got your lender to make you an offer to modify your loan.    Before you sign on the dotted line, think about what you are doing first.  Most of the modifications I have seen extend your loan into a 40 year mortgage, reduce the rate down in the 3% range, and tack on any arrearages onto the loan.  The net on a $200,000 loan is about a $100 reduction in a monthly payment.  Usually, if you are at this point $100 is not going to make much of a difference one way or the other.  Lenders haven't got it.  Until there is a significant reduction in principal, none of these "attempts to renegotiate" don't work.  The last time I checked the default rate for these loans is over 50%.  After all, if you are receiving one of these, you are at least 90 days behind on your mortgage.  If you are considering signing it, understand what you may be giving up.

In order to qualify for a modification you will need to meet some criteria.  First, you must be at least 60 days late or more.  Second, you need to be employed.  It's a very narrow window because most people are behind because of unemployment.  In other words, you need to be in dire straits but not too dire.  Roy Oppenheim is an attorney in Weston, FL and has put some informative videos up on mortgage modifications and foreclosure. Click here for more information.  At the bottom of that page, you will find a series of videos he put on YouTube.  It is informative.

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