Fine print in mortgage modification forms contain booby trap
Why am I not surprised?
Signer beware! Turns out the forms homeowners fill out to apply for lower monthly mortgage payments for three months while waiting for more permanent relief contain a potentially lethal booby trap courtesy of the U.S. Treasury Department.
According to a report in the Miami Herald, the forms require borrowers to “waive important notification rights.”
The result, says the paper, is that more and more homeowners who thought their enrollment in the trial modification period would lead to a more long lasting roof over their heads, find, instead, the rug pulled out from under them by lenders who at the last minute sell the property without even bothering to notify the homeowner.
In addition, of the more than 759,000 trial loan modifications thus far started, just slightly more than 31 thousand have managed to convert to the coveted permanent new loan status.
December 21st, 2009 at 1:24 pm
Not one loan modification has come across my desk. I have had a lot of people who managed to do a full refinance. Many tell me their stories and many heave a big sigh of relief when everything is signed. People are getting relief, just not the route you see in the headlines.
Alessandro Machi Reply:
December 21st, 2009 at 3:30 pm
@Wizcon,
I don’t understand. Are you saying that refinances are the same as modifications?
December 21st, 2009 at 7:44 pm
Refinance could be with anyone. You go through all the hoops to qualify. The majority of refinances I have seen are people who are solid financially for the most part taking the opportunity to get a lower interest rate and many are taking out shorter term loans. 20 yrs instead of 30.
Modifications are working out terms with your current lender. I think you have to show financial stress. I am not on the origination end so I don’t know the criteria for it.
I do know that many of the folks that I have met with that are refinancing are often beginning to struggle financially.
Home values are holding steady here so many have some equity left.I am beginning to see big credit card bills being paid off.
The problem with modifications may be that the borrower has to show they have a tangible net benefit in refinancing.The modification involves proof of hardship.
Sage Reply:
December 21st, 2009 at 9:26 pm
Thanks, Wizcon, for the explanation.
December 21st, 2009 at 10:28 pm
They should just offer an across the board 4% rate to EVERYBODY. Then if people can’t afford that rate, they pretty much know they can’t afford the home. The problem right now is there are rates all over the place and it is not known if a person might be able to afford a home loan at 4% but not at 6%,
Rerack everyone’s rate to 4%, freeze interest rate charges at 1% on all EXISTING credit card debt for anybody who is able to pay down their credit card debt and the economy will move forward better than with government stimulus bailouts.