Some Information You Should Know About Loan Modifications
- Loan Modifications are rarely granted--banks have little motivation to do them, because they often can realize greater profits by selling the property at a foreclosure sale.
- Banks don't want to reduce the principal, so a successful modification, even if it reduces your payments some, may still obligate the owner to debt greater than the projected 5-year value of the property (what it will be worth in 5 years).
- Bank modifications are for people who have already defaulted and banks usually won't deal with people until they've missed one or more payments.
- Banks may not act in good faith, asking for payment(s) "to prove that you're serious" and then will use the fact of payment to argue a modification isn't necessary.
- Banks do not disclose up front what they intend to do. The borrower may get to the end and find the bank will do nothing for them, even after a long process.
