Refinancing after Permanent Loan Mod?

[Pigeyex]

I've just been approved for a permanent loan modification -- including a rather significant principal reduction -- from BofA.  Although I was able to get converted from an adjustable, interest-only APR to a FIXED one, the rate is still horrible -- 8.05%. 

I'd like to be able to refinance this once the permanent modification removes the "Default" and "Delinquent" status from our credit report, but don't have a good feel for how long it will take for my scores to significantly improve?  We really only have two blemishes on our credit, and TONS of paid-as-agreed (and a good job and great income), but the "seriously delinquent" mortgage -- including a Foreclosure lis pendens filing -- is obviously pulling my score way down.

Will I be able to negotiate with the lender about whether or not they put the dreaded "Modified" note on my credit report, vs. a cleaner "Current" ???

Thanks in advance for any feedback.

[JM-AM]

Modifications are a different world most of the time. You can negotiate, but does not mean the lender has to accept.

The reason interest rate is still high is they are still trying to recoup as much money as possible.

Since modifications arent my thing I will hope some one will chime in with much more helpful assistance for you.

[Pigeyex]

Thanks!  And yeah, that's kinda what I figured.  That 8% rate would be REALLY attractive for them to keep in their portfolio, which is precisely why I want to refinance and get the heck OUT of there!  I am hoping after 6-18 months of on-time payments and a status of either "Current" or "Current" (with a "Modified" note added -- yukk), we will be able to qualify for a better rate with our credit union or elsewhere.  Everything else in my credit report and with my job and income would qualify as "Very Good" or even "Excellent."

[JM-AM]

With the modification did they lower your balance? Lets say you owed 100k as example did they lower to 90k?

The problem I see is if your home is under water I am not sure you be able to refi anyway. But I am just fishing here.

[Pigeyex]

It should no longer be underwater after the re-fi.  I got a $202k principal reduction, and I should be about even or a little ahead on the equity afterward.

[JM-AM]

Thats where the refi may not work. Since you had a principal reduction then the bank and or government program takes a major lose on it.

I cant see this happening but it would be nice to know for sure.

[Pigeyex]

Why would a NEW lender care if the prior lender (or the government) took a loss on it? 

All they should care about is the home's current condition, loan-to-value ratio, my income/job history/credit history, and that's about it.  What am I missing?

[JM-AM]

Just wondering how the modification is worded.

Might be some type of lien or prepayment penalties of some type since you accepted a modification. I am just making a guess I really dont know.

I do believe there is something to protect the banks for just these type of situations.

Did you do the modification yourself? Or did you use some one to help you? If you used someone to assist you then they probably have the answer.

This is interesting to know.

[Pigeyex]

No, didn't have anyone prepare it, and I can't even get my attorney to advise me on it, he hates modifications so much.  It's just boilerplate BofA language that they are doing as part of the 40+ state settlement, so they can get credit with the federal regulators and have my $202k in principal reduction count toward their target total of $15 billion or whatever it was.

The permanent loan modification paperwork does say this:

I.  On and after the Modification Effective Date, any provision in the Note (or in any addendum or amendment to the Note) that allowed for the assessment

of a penalty for full or partial prepayment of the Note, is null and void."

That would SEEM to indicate that I can, in fact, refinance when I'm ready (and when I qualify) ???

[JM-AM]

Still hoping some one with modification experience would comment.

I do not do modifications so my limited knowledge is useless.

I do remember a few articles speaking on this subject I just cant think of outcomes.