Reader's Question:
I heard that I have to be late on my mortgage payments in order to get a loan modification. Is that true?
Christian's Response:
Unfortunately, that may be correct. Not always and it‘s not a blanket rule but, for the most part, I would have to agree overall. I never advise clients on whether they should or should not make payments. That is a personal choice and only they know their financial situation. Many lenders today won't take your request to heart (if they had one) unless you are behind and delinquent. They claim it is difficult for them to validate homeowners that truly need a "work out" / loan modification versus homeowners that are trying to take advantage of a down market. In order to complete a successful loan modification, the homeowner must demonstrate a financial hardship to the lender. If your payments are current and on time, that demonstrates the contrary.
I heard that I have to be late on my mortgage payments in order to get a loan modification. Is that true?
Christian's Response:
Unfortunately, that may be correct. Not always and it‘s not a blanket rule but, for the most part, I would have to agree overall. I never advise clients on whether they should or should not make payments. That is a personal choice and only they know their financial situation. Many lenders today won't take your request to heart (if they had one) unless you are behind and delinquent. They claim it is difficult for them to validate homeowners that truly need a "work out" / loan modification versus homeowners that are trying to take advantage of a down market. In order to complete a successful loan modification, the homeowner must demonstrate a financial hardship to the lender. If your payments are current and on time, that demonstrates the contrary.
Many would say that the system is crooked. I would say, forget crooked. The system is flat out broken and is in ruins. In my opinion and professional experience, bankers within the foreclosure department (loss mitigation) are for the most part disorganized, mismanaged, and many have the attitude that they are as holy as Christ himself. It's not all that bad. They do change face and become tolerable once you establish to them that you know the game and that you have figured them out. Then again, who am I? Just the banks best friend!
