Loan Modifications

Much has been in the news media about the Loan Modification Programs to save people from foreclosures and make homes affordable. Let me give you an example of a recent J.P. Morgan Chase modification. The homeowner having fallen on hard times defaulted on her mortgage. Foreclosure was filed. The homeowner requested mediation through the Court and requested a loan modification. She is currently 10 years into her original 30 year mortgage. The modification adds all costs, not just back overdue payments but also court costs, attorney fees, and title report expenses ( every penny the lender spent in the process) onto the loan balance. The interest rate stays the same; well above current rates. The new balance is just $ 3,300.00 less than the original loan 10 years ago. The modification decreases the monthly payment by $ 56.00 by extending the loan for 40 years. As the escrow account is negative, $ 20.00 per month is added to the payment for the first five years to bring it current. The result is a payment decrease of $36.00per month for 5 years then a decrease of $ 56.00 per month for 35 years.