Will my Lender accept a Modification?

As you know, the current real estate market and financial markets are in very serious turmoil, which means that lenders will do their best in order to minimize late payments and avoid foreclosures.

Therefore, the lenders are willing to work out better loan terms with their borrowers in order to stop reduce late payments and stop foreclosure. The current housing market and the economic situation is in very serious turmoil, which means that banks are very motivated to work out a modification that is suitable for each borrower.

Plain and simple: Money motivates a lender, so yes they will work with you to put you in a situation where you can pay your monthly mortgage payments.

Banks are in the business of providing loans and they make their money from the interest rates they charge their borrowers. On the full life of a loan, the compounded interest on a loan could be 4 times, 6 times or even more the original loan amount, and in today’s home market, there are so many people who have interest only loans, where they will never pay off their loan, and simply be paying the bank the interest.

Additionally, the prices of the homes in the United States are falling, so the bank is literally not interested in taking back any foreclosed homes. The foreclosure proceedings, legal fees, vacancy etc in a market that is very unstable is in nobody’s benefit.

With the proof of a financial hardship and the right mitigation steps to work directly with your lender on a solution, a loan modification could in most cases be the only solution from you losing your home and getting back on track with payments that you can afford.

See the calculation schedule below.

If the bank forecloses on you and your home goes to Sheriff’s sale, it will most likely only sell for 65% of it’s true value, or $136,500

In just the first 2 years, they’ll receive 24 pay payments of $1,400, or $33,600.

So, yes they will receive less than what your current contract states, but as you can see:

After forgiving $10,000 in arrearages, they saved $90,500 by letting your home go to Sheriff’s sale and gained an additional $33,600 in payments just in the first 2 years.

The same holds true if they renegotiate your contract just to keep you with their company.

If they drop your $1,200 payment to $1,000, yes they will lose 60 payments at $200, which is $12,000 but they will continue gaining the $1,000 each month for 60 months, which totals $60,000.

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