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The Kitchen Table

What do you know about loan modifications?

9 years ago

Hubby and I have had some major issues with income over the past 18 months. I was let go from my job in August of 2015, finally found something in March of 2016. My income has been reduced by about 40% and as of Christmas in 2016 my husband lost his job and is now on unemployment which has reduced our income again. We carry a first and a second, we're in the black on balance to value. We successfully did a loan modification on our first before husband lost his job. They reduced the interest rate and now include the taxes and insurance. We tried to modify the second but they say we don't qualify due to income. Yes, I'm reporting the lower income for husband. Isn't the purpose of a modification to modify the terms due to unforeseen circumstances with the result being something favorable for both parties?

Featured Answer

Elmer J Fudd

9 years ago

I know a little about it but have no personal experience.

I think your understanding is right. It's a practice banks evolved into doing (and boosted by a now expired federal program) for the reason you state, the process is intended to make payments more affordable to hopefully help the borrower avoid a loan default and foreclosure. For a bank, getting timely but reduced payments is better than getting nothing. There are no overriding rules, I believe what a bank will or won't due is determined by its own policies and choices. Most large mortgage lenders these days have very rigid guidelines and grant employees (and borrowers) little to no wiggle room outside of the rules.

Sorry to hear about your situation, I hope things get better for you soon.

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Comments (7)

nanny98
9 years ago
(((((HUGS))))) I know and understand your situation well. I'm so very sorry. It will not help for me to tell you that it continues to be a serious situation for (my kids) many people in the same situation. If you are older the job market will continue to be painful too, Sincerely sending very best thoughts that YOU will escape before long.
two25acres thanked nanny98
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User
9 years ago
((((( two25acres )))))
two25acres thanked User
two25acres
Original Author
9 years ago
I appreciate the sentiments but we're actually doing ok. I came to the conclusion during my unemployment that I don't want to work my butt off to buy more stuff. Things became unimportant to me. We only have day to day expenses right now and we're making it but I'd like to be able to focus more on rebuilding our savings as we have depleted that. Hubby is 64 and will be 65 in August. I'm not against his retiring and picking up some part time work as long as I don't have to work harder for that to happen. We have my mother living with us, she's 80 and has her share of medical issues and that wears on me. Thanks for the thoughts today.
chisue
9 years ago
I'm sorry for your troubles. How is the housing market there? Can you sell and buy or rent while you try to save? I agree that you must put something away...for the *next* rainy day.
two25acres
Original Author
9 years ago
The market here is starting to turn but I love my house and our land. My mom's husband is in a nursing home in our town as well. He has Alzheimers, we couldn't move until he passes and Alzheimers is the long good bye. He could be with us for a while yet. Our goal has always been to do a reverse when we retire or sell and just hit the road. We have no kids and no obligations except my mom right now. Our first modification was perfect, done in less than 30 days and locked us in at 3.375. The second is the problem, we were hoping to shave a couple hundred off of it monthly through the modification but the lender says we don't qualify because of income.
chisue
9 years ago
I understand your feelings, but going into retirement with mortgage debt and no savings? Sometimes you are ahead to be proactive while you can still choose the path. There could be no property to back a reverse mortgage if 'rainy days' become your normal financial 'weather'.

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