Why Loan Modifications Often Don’t Work
SmartMoney.com has a good article about some loan modifications. It states why in some cases a loan mod is not as good as it seems (though anything is better then losing your home isn’t it?)
Fortunately, since August last year, Kroger’s been negotiating a deal that should allow him to stay put. Beginning next month, his loan servicer, HomeEq Servicing, will reduce his adjustable interest rate to 3% for two years. (The rate will then increase by one percentage point a year, up to 6% on year five.) The new modification will reduce his $1,300 monthly payment to $870.
It’s a significant improvement from the three so-called forbearance agreements he’d received in the past year and a half. Those deals only added the past-due amounts to his monthly bill, at one point boosting his payment to as much as $1,800. “They make your mortgage payment bigger so you can catch up… and you can’t afford the original one,” he says. “[Now], I’ll definitely be able to keep my house.”
