What is mortgage modification and is it worth it over bankruptcy?

Question

What is mortgage modification and is it worth it over bankruptcy?

Answer 1

{I am NOT an attorney, so you'll need to check legal specifics with counsel.]

A modification changes the terms of your mortgage (usually) lowering your payment, and "catching the payments up" if you're behind.

Because you're still in decision-making mode, I would suggest you try to figure out what you'd like to see happen BEFORE you choose your tactics.

Once you've decided what you're hoping to accomplish at the end of this process THEN you can work with someone to figure out which tools and tactics will get you there.

If you don't decide this in advance, then you're much more likely to get railroaded, or follow poor advice.

Remember to QUALIFY anyone who's giving you an opinion... even me.

Also, when it comes to modification and bankruptcy, It does not have to be an "either/or" proposition.

I've worked with a number of homeowners who wanted to keep their homes and we worked in concert with the bankruptcy plan in order to deal with the credit cards/auto loans, AND get the mortgage modified.

Also, a number of attorneys are telling people that they have to forfeit their homes when they file a Chapter 7, which is not true.

If your main reason for filing is to keep your home, I can tell you that Chapter 13 is a very poor choice, for a number of reasons:

1- You're guaranteed to be on a repayment plan, which will raise your payments, not lower them.

2- At this time, there's no provision to lower your home mortgage payments on a first lien.

3- If you have an adjustable rate mortgage, the BK court cannot protect you from payment increases.

4- The failure rate on Chapter 13 plans is 60-80%, depending on whose numbers you want to believe.

There are other drawbacks as well, but for now, your job is to get some clarity on what it is that you want.

If you need some help assessing your information or coordinating a modification, click on my name and send me an e-mail, or opt in for the free report at http://foreclosureresolutioncenter.com

It sounds like you've had a rough time lately... keep your chin up- things will turn around for you.

Answer 2

Im glad you asked. I specialize in mortgage modification What is Mortgage Modification?

Loan Modification- This term has been getting a lot of attention lately and rightfully so. With millions of homeowners stuck in toxic adjustable rate mortgages and no ways to refinance out of them, loan modifications may be the only way to assist struggling borrowers. This term is used when your lender modifies your current mortgage (same loan you have, only changes are made to the note) in order to work with you and make your mortgage more affordable. A modification to your rate, balance of loan, delinquent fees owed, term of loan etc. can be made by the Lender. In the past this was only used when a borrower was delinquent but now we will see it being used before someone is delinquent. This will be the hottest term and the best way to help people avoid foreclosure.



With a loan "modification" you take the mortgage you now have and change the interest rate and payment requirements in order to achieve a fixed rate. A change in rates and payments does not result in the need for a new closing, legal fees, survey, appraisal, or taxes. In contrast, if you "refinance" a loan you'll be required to have a closing and forced to pay a variety of fees and taxes.

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Our website is www.mydebt101.com

P.S. I will give the straight facts about  bankruptcy, and the

positives and negatives as well of debt reduction.

Also, I can send you some articles from recent news reports about loan modification.

Answer 3

you should consult a BK attorney before you make a move but loan modification is a great tool... if it truly helps you.  go for it.

Answer 4

You have a mortgage of $100,000 at 8%.   In the old days, if the interest rate fell to 6%, you would be interested in refinancing so your payments would go down.  Before refinancing, it was smart to call your current lender and ask what they would offer. To keep a good customer they would offer to "modify" your loan to 6.75%.   Not as good as the 6% refinance but a modification cost you nothing and there were no appraisals or credit checks so they were very attractive.

With the realty downturn, homeowners are asking for modifications.  The offers from the banks have been discouraging.  They are mostly adding your back payments on to the end of the loan so your loan is 32 years instead of 30.  But you don't lose the house.

In bankruptcy, you stay in the house for 6 months payment-free , then hit the road when the bankruptcy is done.