Mortgage Modifications Are Increasing Payments, Fees For Some Homeowners

usatoday.com:

Tens of thousands of financially strapped homeowners who have asked lenders to lower their mortgage payments are instead winding up with higher monthly payments and larger debts on their homes.

Homeowners who were hoping for lower payments are discovering to their dismay that lenders roll late fees, back taxes or other costs into the principal, sometimes turning a difficult payment into an impossible one.

Read the whole story: usatoday.com

Comments

[rubrik r]

President Obama’s loan modification plan is meant to rescue the housing market and restructure the current mortgage plan. The new plan is designed to aid struggling borrowers during the current time of dipping property values. The Obama administration aims to rectify what the Bush government overlooked regarding foreclosures jeopardizing the average homeowners.

The efforts so far, however, have got little footing. To modify a loan the lender will need to modify the mortgage structure of a troubled borrower. Reducing the principal amount that the borrower owes would mean that the homeowner would repay less money back to the lender or the bank over time. Hence it is not surprising that lenders and their representatives rarely agree to modify the loans as that would mean reduced income for them. Although the loan modification program offers incentives to change mortgage terms it does not compel lenders to reduce mortgage rates. Consequently, the loan modification plan is not proving to be of much help in the foreclosure crisis.

Read More http://www.housingnewslive.com/us-housing-news-articles.php

[politkal kos]

Our future has been spent. The bail out is like throwing water on a electrical fire. It will be a miracle if in 10 years if "real" unemployment falls below 10%. The middle class will be joining the ranks of the impoverished. If you have ever been to europe this is what our society will become. Some may like this others not. Our steady decline over the last 30 years from a great nation to a begger nation could have been avoided but greed triumphed over the public good .

hat tip to http://www.iamned.com good articles

The nation as a whole has changed morally and ethically for the worse and we are reaping what we have all sowed..

[DosGatos2]

"If you have ever been to europe this is what our society will become."

We should be so lucky. Here is just one example. In Switzerland, people have a form of national healthcare which means that they never have to worry about medical bankruptcy or losing their homes. Swiss CEOs make less than comparable U.S. CEOs in firms of similar size so there is more money to put in employee retirement accounts. It is mandatory that employers put 3.5% of a person's salary in a pension plan for retirement, though many employers put in more. Also, there is a capital preservation guarantee, so no one loses one dollar of what was put in to the pension plan (wouldn't that have been a nice thing to have in October 2008?). By law, there is a minimum guaranteed rate of return on the pension investments. The Swiss have one of the highest standards of living in the world, get a minimum 4 weeks vacation by law though many employers provide 6 weeks. If you are laid off, you can collect up to 70-80% of your salary for a year. And the Swiss can retire as early as 55 with full benefits.

Yes, Europe. A horrible, terrible place to live! What an awful role model for the U.S.!!

[Sumocat]

Credit unions are the only way to go. Countrywide and others offered to save me half a percent on my mortgage when I applied for mine, but I stuck with the CU because they didn't intend to sell my mortgage to someone else for a profit or make up the difference in fees. What I pay in interest is what they make in profit. That's how loans are supposed to work. It's a practice that banks and commercial lenders have long abandoned.

[lvdragonlady]

Of course this situation is the most likely path when refinancing. Think about it!!!
UNLESS the new loan is based on (1) a new appraisal (2) loan is based on this appraisal, nothing is going to change. Good grief people do the math, if you can!!

[Chironomid]

I worked my butt off awhile back renegotiating a second mortgage loan. The bank made a lot of cloak and dagger moves, and vague promises and noises about "it depends on the investors". They eventually came out with a proposal that was worse that what I was paying - totally insulting. That took months of haggling, personal loans from family, a lot of stress...

So, I told them to pi$$ up a rope and filed Chap 13. They got nothing. It was so satisfying. I still smile. They made a lot of noises about my credit. Was all b.s...

[IndependentMeans]

The Obama Admin. plan for us personally has been a lifesaver. We are being allowed to change our 15 year loan to 30 years at the same interest rate of 6%. We are in our final month of the trial period, and our payments went from $3000 down to $1650. I am very grateful.

[ImAliberal22]

Why is it so hard to find good, progressive leadership in America?

good articles for a slow news day: http://www.iamned.com

American needs help.

[rubrik r]

President Obama's housing rescue is gaining momentum in refinancing troubled borrowers with higher-rate loans and modifying untenable terms for others.
But the programs have been off to a slow start and in some cases will be too late or not enough to help severely struggling homeowners, industry analysts agree.
Private sector efforts to alter loans terms have made headway but are facing an uphill battle as the unemployment rate heads to double digits.
Problems emanating from loans made when standards were much looser have taken a back seat to defaults stemming from job losses and wage cuts.
"Unemploym­ent-relate­d foreclosures account for much of this increased activity, and the high number of borrowers who find themselves owing more on their mortgages than their homes are now worth represent a potentially significant future risk," James J. Saccacio, RealtyTrac chief executive, in a statement.­"

Read More: http://www.housingnewslive.com

[Furby]

It's pretty basic math. If you make about $50K per year, you can afford a $150K house if you have 25% down and the interest rate is around 5% or lower and the taxes are about $1200 per year. Otherwise, you can't afford a house. Don't people sit down and do the math anymore? What makes people think that on $100K (two incomes) you can buy a half million dollar house? Mathematically impossible. If you're paying more than one third of your after tax income on your lodging, you're in trouble. They should be teaching this stuff in high school.

[Schnides]

I like the idea of teaching home ownership in high school.

[Artos]

This is a case in which the eyes are bigger than the stomach to steal a metaphor. I personally could not even envision owning a house that cost 575,000 dollars. This is what comes of watching to much "Lifestyles of the Rich and Famous".

[punkindmb]

I bought my first home conscience of how much I could afford each month. But that was of little consequence when I lost my job a year or so later. So we can't lump everyone into one category, or call anyone names, unless we've walked a mile in their shoes.

[GTRich2004]

This article pointed out something that many new home buyers don't understand or just don't realize; property taxes will eat you alive and you have to plan for them when you buy your house. When your property taxes go up by 10% each year, it doesn't matter if the mortgage company reduces your monthly payment by cutting the interest rate or by reducing the principle. The savings you got from the lower payment was just wiped out by the increase in the property tax. I also wonder how many of the reworked loans now have to carry PMI for the first time. Since many of these people are under water, they aren't going to have the 20% equity they may have had in the past which let them skip PMI. So there's another hundred bucks or so that just got added to the payment.

[Furby]

Wow, that's amazing. I didn't know that in the US, you don't have to take PMI. Here in Canada, only excessively rich people don't take PMI. We commoners always have it. It just makes sense.

[GTRich2004]

You may be confusing PMI with regular hazard insurance, or you may call hazard insurance PMI in Canada. PMI in the US is purely to protect the mortgage company from you defaulting on the loan and isn't required when your primary loan is for less than 80% of the property value (hence the popularity of the 80/10/10's or 80/15/5 loan/loan/down payment programs).

No matter what your loan %, hazard insurance is required by most lenders because they don't want you to get stuck with a pile of rubble after a fire and have no way to rebuild the house.

[JoeBlough]

What's PMI?

[GTRich2004]

http://www.bankrate.com/finance/mortgages/the-basics-of-private-mortgage-insurance-pmi.aspx

From the link:
If your down payment on a home is less than 20 percent of the appraised value or sale price, you must obtain private mortgage insurance, known as PMI, with your lender. This will enable you to obtain a mortgage with a lower down payment because your lender is now protected against any default on the loan.
PMI charges vary depending on the size of the down payment and the loan, but they typically amount to about one-half of 1 percent of the loan, according to the Mortgage Bankers Association of America. Mortgage insurance premiums are not tax deductible.


This isn't to be confused with hazard insurance that your mortgage company is also goign to force you to carry.

[WIpatriot]

Anybody think lenders are not going to take advantage of this situation?

[punkindmb]

Not me. The credit card companies are already taking advantage of the new credit card regulations.

[DamaskinosWasRight]

+
The average house price in Orlando is down to 130K.
+
I am really trying to find a job down there.
+

[proudem]

Banks should not be able to collect on late payments on re-modified home loans. It was the banks that had to go to the Government to beg for bail out money and there should be some consideration given to the home owner.

[DestinationsUnknown]

I will validate Bush in 2003 for you- I have asked reporters and politicians on C- Span, and also direct emails and probably 1000's of posts- asking this question:

In 2003 what were the 'NEW TOOLS AND RESOURCES' implemented ADMINISTRATION-WIDE in June 2003?

National Homeownership Month, 2003
For Immediate Release
Office of the Press Secretary
June 13, 2003
By the President of the United States of America
A Proclamation

Homeownership is more than just a symbol of the American Dream; …

The Department of Housing and Urban Development is leading an Administration-wide effort to bring new tools and resources to would-be homeowners.

What were these NEW TOOLS AND RESOURCES?

LED by the ADMINISTRATION in 2003?

[PartyPartyParty]

The "new tools and resources" were the relaxation of lending standards.

Instead of raising more people out of poverty and into middle class by creating policies that increased wages, access to affordable health care and child care, and affordable housing, all tough slogs politically, Bush, Congress and the Fed decided instead to allow banks to lower their lending standards. Thus, interest-only and flexible rate mortages became all the rage.

The market does not raise people out of poverty. Government intervention does. Putting Wall Street and the real estate industry in charge of improving the people's living standards is about as effective as putting tobacco companies in charge of an anti-smoking campaign.

[rbchilds]

Government intervention does not raise people out of poverty, people are raised out of poverty by education, jobs and common sense. The third of which seems to be lacking of alot of people these days.

[DestinationsUnknown]

Then why are all the do nothings blaming Barney Frank and Chris Dodd?

2003?

[mrcontinental]

This is no surprise, the system is rigged and the little guy cannot win.

Everything that you have been told is a lie.