Recently, the Federal Reserve announced that it would purchase $40 billion of Fannie Mae and Freddie Mac loans per month, indefinitely. This will allow the Federal Reserve to have a vested interest in Fannie and Freddie and to be a significant voice in Fannie’s and Freddie’s loan modification policies and procedures, which are so overwhelming that often the average homeowner just gives up. Some homeowners stick it out by repeatedly sending out the same documents to the lender. If they successfully obtain a loan modification, in most instances it will only temporarily reduce the initial interest rate, roll in any arrearages and then amortize that amount over 30 or 40 years with a balloon payment at the end of the original term. As an example, if your original loan is amortized over 30 years, but your actual remaining loan period is only 20 years, you could end up owing a balloon payment in 20 years at the end of the original term loan. If you don’t have the money to pay the original lender, and you cannot refinance, the lender will foreclose on the home. All of this information may be hidden in your loan modification’s small print.
Before accepting a loan modification from your lender, you should consult with an experienced mortgage loan modification attorney about the hidden pitfalls with paying the loan off, as well as ensuring you are not waiving any of your rights under your current mortgage. Please call my office at 480.833.1113 to set up an appointment today!
Attorney Profile: Janet Spears, Debt Relief Attorney