Loan modification?

[floradelaluna]

What is the name of your state (only U.S. law)? GA

After being late on mortgage payment for the first time, was quickly contacted by the lender, to offer us LOAN MODIFICATION. They faxed a pkg. of information which I have difficulty making much sense of how it will help us. Our rate is good, so no re-finance. They did, however, say that it may be possible to skip approx. 3 months payments. They are so eager to offer this, that something smells wrong. There is some benefit to them, I just don't know what it is. I have asked around and not heard good things about loan modification. Again, this is the lender, not a third party (which I would never do anyway!)

 

[tranquility]

The government has a program to help people in trouble with their mortgages, if they qualify. The bank doing such a modification gets some amount up front and certain guarantees on the loan from the feds. Also, as a policy issue, the Congress has been threatening banks with a change in the BK code to allow for "cramdowns" if they don't get more troubled loans into the program as it hasn't been that successful yet. (At least from a percentage of participators who are in trouble point of view.)

If you have had a change in circumstances where your ability to pay the mortgage has been made more difficult, you may fall under the guidelines for the program. The bank can forgive amounts, extend the loan and make non-market level interest rates available. If you're having trouble, I'd look into it.