Real Truth about Loan Modification Programs

[malonzo2]

Like many we waited in anticipation of the outcome of the Trial Payment Period plan of the loan modification workout package. We were hopeful as they presented us with a an affordable trial monthly mortgage amount and explained that our new payment may be just as close to this amount after the trial payment period has been completed and approved.

Well, low and behold we were approved for the Loan Modification thru Aurora Loan Services. We were so stocked when we found out and actaully felt relieved, like a weight off our shoulders. But that was short lived as we looked thru the approved workout package and realized what they had done to make the loan amount more affordable. And that being the key word "Affordable". The actual loan modification was a catch 22. Yes they reduced our monthly mortgage amount but here is what they did to get that amount to a target that we needed to be in.

1) Reduced APR to 2%, fixed for 40 Years
2) Increase a Payback 30 year term to 40 years.
3) Add all monthly payments in arears to the end of the loan.
4) The home Loan amount is still the same.
5) They never reduced the mortgage amount to the market.

This experience is like buying a new car, they only ask you what your target monthly payment needs to be and they make some interesting financial juggling to make that happen. They don't actually reduce the price of the car, they simply extend the terms, try to get you a lower rate, and possibly have increase your down payment. It's a well proven system and scam and works like cash at a strip club. So now we are wondering if we should still seek a short sale and find something that is market viable. Because were still in home that is worth only a 1/4 of what the loan balance currently is. Even with this loan modification the monthly payment is affordable, but the loan amount vs the home value are still upside down. The administration needs to be made aware of this new twist on bad loans and bad loan modifications. If anyone else has any new info they can share regarding what is happening with their modification I'd love to hear it. Good luck on your end.

Mr. Upside Down

[mmpcreditrestoration.com]

Great post Mr. Upside Down. Best of luck to you. Hope everything works out. Welcome to the Forum!