by Brad Officer
on Monday, January 25th, 2010 at 1:15pm.
Horror stories are now floating around everywhere about failed Loan Modifications. I've witnessed many of these first hand as friends have attempted to get modifications and they flat out fail.
Several Major Concerns with a Loan Modification:
You agree to "modify" a loan on an over valued house that could take DECADES to break even. Bad idea. So now you are pretty much payment over priced rent to a bank on a property that you won't have basically any ownership in until WAY OFF In the future. Just a bad idea.
70% of loan modifications result in HIGHER Payments! Check out the Loan modification article from Wall Street Journal. This is not 50/50 but instead a very high likelihood that you will get a higher monthly payment when you jump through all the hoops.
You will NOT get a principal reduction. Principal is the balance of what you owe the bank. See the article above.
Crazy amounts of frustration, red tape, and bank shenanigans will be your path. Need a story of what it will look like. Read this persons experience with a loan modification process. If you need more stories, ask around in Jacksonville, Ponte Vedra, and Orange Park, FL. Many of your friends and neighbors are going through this first hand.
Only 7% of those who applied for a modification actually received a permanent mod. 7% is a tiny fraction.
If you are one of the very few lucky ones who actually get approved for a permanent modification, it's a 25% chance that you will fall behind on payments again. Read this article from Bloomberg about loan modification recipients fall short.
If you have faced a financial hardship and find it difficult or impossible to make your mortgage payment, You should face reality that your house needs to be sold. Get out of there and move on to the next chapter.
Short Sale, Deed in Lieu of Foreclosure, and Foreclosure are your next options to get rid of the house. A short sale is the banks preferred option and will almost always be recommended when you do not get a loan modification.
To learn more about how to Short Sale your home in Florida, check out the Short Sale information guide.
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