Is This A Government Loan Modification Or An Alternative Loan Modification From Our Lender?

by Confused with the Gov. Loan Mod Offer

Our lender told us we qualified for a Government Loan Modification. They lowered our loan 70,000 dollars, but we had to agree to pay 2300.00 a month for 3 months before they would give us the actual modification.

We were also told we would get 3.9% interest rate but ended up being offered a 5.35% interest rate, that is 2points lower than what we originally had but the house payment is more than one paycheck.

I guess my question is: Did we get a Government Loan Modification or is this something our lender has come up with? Others I have talked to say theirs was done all at once, no trial period.

Mortgage Loan Modification Answer:

by Loan Modification Expert - Dan North

You are correct this is not a modification per the Government Guidelines of the Making Home Affordable Program.

Since your payments went up it sounds like a repayment plan followed by a loan modification that may still be higher than your current payment until you have repaid the delinquent amount on your loan.

Do not accept this offer! Make a counter offer to have the delinquent payments tacked onto the back end of your mortgage and have the lender waive any interest and penalty charges on the delinquent amount.

If this was a HAMP modification your interest rate would be lowered to as low as 2% before a principal reduction was offered.

My first guess is that you are being offered a Principal Forbearance and not a principal reduction which means that you would still owe the $70,000 when you sell or refinance but that you are not being charged interest payments on the $70,000.

Under the Making Home Affordable HAMP program your modified mortgage payment should be no higher than 31% of your gross monthly income. That target monthly payment on your 1st mortgage includes the mortgage payment, homeowners insurance, property tax, any Home Owners Association Fees and is to be no higher than 31% of your gross monthly income.

I want to see what you really qualify for on a loan modification so fill out the FasTrac Hardship Loan Modification Pre-Qualification Form. This will give me the information to see what Hardship Loan Modification you qualify for even if you do not qualify for the Government Program.

Under the HAMP Program there is a three month trial period but your lender can elect to go straight to the permanent modification if you submit all the required paper work when you make your loan modification request submission. This could cause a problem for the lender to receive the Government Incentive Payments since the three month trial period is required to show that you can make the payments and do qualify for the modification under HAMP. For that reason your lender may require the three month trial period.

If your lender offers you a loan modification that is not under the HAMP Program there is no trial period required.

Related Loan Modification Questions & Answers:

• Upside Down Mortgage Need Help
• How Can We Find Out If We Are Eligible To Lower Our Monthly Mortgage Payment
• Can I Lower My Modified Loan Payment By Getting Cheaper Insurance And Lowering My Property Tax
• Simple Mortgage Modification Arithmetic
• Citi Bank Said I Qualify For Loan Modification, Can I Ask For Reduced Interest Rate?

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