Under the Home Affordable Modification Program called HAMP some very dangerous events can occur.
The banks have the ability to modify a loan with a three month trial period, during which time, the interest rate is adjusted to a low rate and is calculated on a fixed 30 year basis. So far, so good…..then the banks say if you do well, make all the payments on time during the trial period, they will make the loan permanent.
EXCEPT…when you read the small print, you will find that you have waived important notification rights. The bank can decide to auction the house during this period without notifying the owner. This is a major problem in this program!
There have been 759,000 loan modifications begun and only 31,382 have been converted to permanent new loans.
The homeowners see this loan modification program as a social assistance program. NOT TRUE!! The banks see it as a stall until they decide whether it is more profitable for them to sell the house rather than perpetuate the relationship with the current owner.
Banks see the situation from a different vantage point. The longer the owner makes a full payment, even if he is in pain, the more time passes until the bank can sell for a higher price in the marketplace when they foreclose. Banks know that real estate is cyclical. Prices go up in time. Owners don’t always have that luxury. They need help quickly expecially since unemployment changes their ability to pay.
Before you accept loan modification terms, read everything, ask every important question. Until this program is revisited by the government to correct its’ pitfalls, you have to look out for your own interests.
Please call me anytime for more information.