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The Modification Truth or Consequence

 


Starting with Loan Modification Myths

Many people may think that with all the regulations and laws Congress is passing that they are probably safe to go out in the housing waters again.  Sadly, real estate and mortgage predators have continued to thrive as they find ways to prey on the most distressed homeowners, or pressure buyers to enter the market based on shaky sales pitches using economic data.   Despite all the noble efforts of the FBI's fraud prevention task forces, it is very hard to prove a case of outright wrong doing against a lender or real estate company. 

One thing we would like to explain to every homeowners before you take out a mortgage is THERE IS NO RIGHT TO MODIFY YOUR LOAN IF YOU FALL ON HARD TIMES, OR YOUR HOUSE LOSES VALUE. That is why it is absolutely ESSENTIAL for you to be educated about all of the benefits and costs of owning a home.  

 Millions of Americans are under the impression that banks must want to modify their loans to keep them from foreclosing.  The very cold truth is, banks want to make a return on the money they lend, period.  Neighborhood stability, personal financial wealth goals, and personal hardship are simply beyond the scope of why banks lend money. 

 One of the pieces of paper that you will sign at your closing for every mortgage you get is a Promisory Note.  That is a promise to pay.  Read the note from top to bottom.  Nowhere is there a right to modify given to you, or a legal requirement for your lender to help you with lower payments if you suddenly can't afford the loan. 

 You may be saying 'but all the bad loans are gone'.  This isn't a problem anymore.  As this content is being written Heartland Mortgage is being solicited by lenders offering loans with very little down payment, very low credit scores to people with very little employment.  These programs are very similar to programs that we heard about just a few short years ago: subprime.  

We know we can't protect everyone from predatory lending, and that programs will be offered that will likely cause financial problems in the future.  What we can do is educate borrowers to make sure that they, their friends, and families and neighbors fully understand the benefits and consequences of these loans. 

 

Copyright 2011, Dennis "Frank" Ceizyk Jr