Why Are Mortgage Modifications Still Not Working? Part I

16 Jun Why Are Mortgage Modifications Still Not Working? Part I

Mortgage Modifications are not turning out to be the best alternative for distressed homeowners because there are too many hands in the pot to make the modifications feasible. To put it simply, in order for a mortgage modification to work out properly, everyone has to be on board and have the same agenda: To keep the homeowner in the home. Unfortunately, that is not always the case, and even more unfortunate, is that the number of modifications that actually do occur is simply not enough to stem the tidal wave of foreclosures. The question is: Why are the modifications not working? The answer is complex, and therefore, it is easier to start with the players in the transaction. There could be two players in a simple transaction, the lender and the borrower. In a complex transaction, there could be the homeowner, a mortgage servicer, a securitized trust, and maybe even mortgage insurance, each with their own agenda and a set of rules to play by.

Let’s start with a simple transaction between a buyer and a lender, usually a local bank. In this type of situation, the borrower can go to the bank or call the bank and deal with someone directly. Of course, the banker will have to speak with his or her superiors and figure out a way to protect the banks interests and keep the homeowner in the home. Pretty simple and straightforward. If you look a little deeper, you will see that the homeowner must face the music, put away his or her pride and deal with the situation. Many debtors deal with what I like to call the ostrich effect (bury their head in the sand until things get better). Well, things will not get better unless they begin to deal with their creditors. So, if you are dealing with this type of situation and are reading this blog for advice. The time is now to contact your lender and begin to find out information. Find out what their guidelines are for modifying the mortgage. Find out what needs to be done now, and what needs to be done next. This information will empower you and get you in touch with the person or department that can help you.

But remember, the bank has an agenda too, and their agenda may not work with your agenda. In other words, they may want something that you are not willing to give up, like more collateral or a higher interest rate. If that is the case, get ready to start negotiating. Nor do the banks want to get the reputation of modifying mortgages too easily. In other words, if it gets out that Bank of America will modify your mortgage if you call Betty at Ext. 3475, then how long do you think it will take before Betty is doing something else at Bank of America. Likewise, if Bank of America eases it’s standards, many individuals will be calling whether they need a mortgage modification or not.

Part II of this article will deal with the more complex transactions.

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Carmen Dellutri is a proud member of the Florida Bar, and he is a Board Certified Consumer Bankruptcy Attorney, Certified by the American Board of Certification. He practices in the areas of Consumer Bankruptcy and Plaintiff's Personal Injury. He is the principal attorney at The Dellutri Law Group, P.A. The firm supports many charitable and civic causes by donating time and much needed capital to our community. Mr. Dellutri and the other attorneys in the firm routinely speak to students of all ages about various legal and societal issues.
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