Mortgage Modification May Not be a Cure-all

Realty Times carries an article by Broderick Perkins – "Is A Mortgage Modification For You?"

"Home loan modifications are designed to save homeownership, but they've also created a new mortgage maze pitted with "buyer bewares."

While the demand for modifications is increasing due to federal, state and local foreclosure and bailout efforts, Perkins writes, "Caught in the lurch, homeowners are finding it tough to know when a modification will work and how to best obtain one."

What is a mortgage modification?

A home loan modification, granted only upon the existing lender's approval, permanently reworks some of the terms of an existing mortgage in order to make the loan more affordable to the homeowner.

The strategy is typically designed for homeowners struggling to pay their mortgage, not for those who can pay their mortgage or are eligible for a refinanced loan

Will a modification work for a borrower? Maybe not if:

• The modified loan comes with payments you still can't afford.
• Your current interest rate is already low and there's no room for the lender to lower it further.
• You can make the new payments, but the mortgage balance is greater than the value of your home and you don't plan on staying put long enough to reverse the loan-to-value imbalance.
• You have not already missed payments on your mortgage or can't show financial hardship due, say, to job loss, pay decrease, illness or interest rate increase.
• You have other properties, investments or assets that could be liquidated to cover your mortgage debt.
• A short sale (The lender forgives a portion of the debt owed if you can find a buyer), bankruptcy, auction sale, refinance or other approach, short of a foreclosure, is a better option.

Read more here.

Vested Title Inc.

648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220. Fax 201-656-4506
E-mail vti@vested.com - www.vested.com

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