Mortgage Loan Modification

[Anonymous]

I have a FICO score of more than 750 for the last couple of years. I always pay my mortgage on time but I am expecting to be laid off soon. What is my best bet. Should I contact the bank right now and tell them what is going to happen or should I wait, skip my payments and in the meantime apply for modification of loan. But I have heard that if you do not have a job they do not modify loan. I am not sure when will I get my next job looking at the economy.

Thank you all for your help !

[Anonymous]

you have to be able to show ability to repay for a modification, so if you are jobless right now, it is unlikely.  They may give you a couple months forbearance so you can skip 1 or 2 payments, but even that is unlikley.

[Lel]

You're in a bit of a catch-22.  It is unlikely that you will qualify for a loan modification for a hardship that has not occurred.  But like mickie said, if you don't have the means to pay even the modified payment amount, then you won't qualify for a modification either.

It is generally not recommended to intentionally skip payments in order to force the lender to offer you a modification.  Many, many people have tried this and ended with no modification and a crumped credit score.  Late or missed payments may be inevitable, however, if you are unable to pay for the basic necessities.

[Anonymous]

Thanks for the quick response. Any idea what is the bottom line where they can affer loan modification. If I was earning $ 100K in the past and now I go to Walmart and get a job for $ 20K, will they modify my loan equivalent to 31% of 20K.

[Lel]

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Pathan wrote:
Thanks for the quick response. Any idea what is the bottom line where they can affer loan modification. If I was earning $ 100K in the past and now I go to Walmart and get a job for $ 20K, will they modify my loan equivalent to 31% of 20K.

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What is your current interest rate?  Are you in a negative equity situation?

The lender can't cut your interest rate to zero.  If you are unable to afford the mortgage payments even if the rate has been cut to a reasonable level (which may be as low as 2%), then a modification will not be in the cards.

Some lenders are starting to write off the principal as part of their modifications.  These are still the exception, not the rule, and are resevered for those who are badly upside down on their mortgages.

[Anonymous]

I have a interest only loan @ 5.77%. Loan amount is $ 528,000. So monthly I pay $ 2541. The value of house is $ 400,000