A USA Today story analyzed trends in mortgage modifications, finding that some homeowners who were hoping for lower payments are facing modifications that rolled late fees, back taxes or other costs into the principal.
End result? What started out as a difficult payment is now an impossible one. The story noted that this is one reason many reworked mortgages are sliding back into default.
“Of loans modified from Jan. 1, 2008, through March 31, 2009, monthly payments increased on 27% and were left unchanged on an additional 27.5%, according to a recent report by banking regulators. Many modified mortgages fall delinquent — 25% to 40%, depending on the type of mortgage — often because of homeowners’ loss of income or additional outstanding debt, according to a report last month by CreditSights, a financial research firm.”
If you are considering a loan modification, seek a debt settlement counseling session with an attorney who represents your interests. We are trained to identify all the possible outcomes of the modification your lender or mortgage company proposes.