LOAN MODIFICATIONS

I blogged about loan modifications a couple of weeks ago and had many questions about it.
Let me first explain what a loan modification is. It is when the mortgage company modifies the note for a borrower. They modify the note in three different ways:
1. Lower the interest rate.
2. Extend the time until the next rate change.
3. Lower the amount secured by the note.

You may ask, "why would a bank do a loan modification?" Usually they are for people in arrears and needing assistance prior to foreclosure. Today they are being done for people to secure them in their home and remove the desire to walk away from the mortgage. Our market is creating enough bank owed property as it is and the banks want to keep more from entering the market. They can achieve that by keeping people in homes through lowering rates, extending times to rate adjustments and lowering loan balances.

I called my bank, Country Wide, and asked for a loan modification. They extended the time for adjustment on my 5/1 ARM to 60 months forward. Giving me 5 more years until the adjustment date. They also lowered my interest rate from 5.25% to 5%. My loan is a JUMBO and rates for a JUMBO are in the low 7's. I think this is AWESOME. It is saving me $100 per month in interest and took the fear of that future adjustment out of my mind.

I highly suggest you call your mortgage company and ask about a "Loan Modification."