Forbearance agreement don't work! Loan modification alternative!
Submitted by wealth2366
from AK
- 06/24/2009 - 5:17pm
A forbearance agreement is an option that is being used by many homeowners these days in order to avoid foreclosure and bankruptcy. And while a forbearance agreement may not affect your credit score and may help some solve their problems, people should be aware of the pitfalls involved.
One of the biggest problems that people have with forbearance agreements is that many homes lack the equity needed to get a bank to accept such an agreement. In order for the bank to feel comfortable tacking on interest and missed payments on the back end of the loan, the lender wants to see that the home has sufficient equity to support the extra costs.
With a forbearance agreement, the lender agrees to let the missed paymets accrue until the baloon is due, but, if the mortgage trumps the homes value, or is close to it, the lender will not be willing to allow a forbearance agreement to take place.
Another issue with forbearance agreements is the fact that even homeowners with equity may still not be able to handle the penalties and interest that will be due in 1 or 2 years when they have to pay the back payments in full. The homeowner will have to immediately begin to make payments with a forbearance agreement and not miss any more payments in the future, if they due they will be right back in foreclosure, and end up losing their home. Now, why would you, as a homeowner, want to be put in a situation where you end up experiencing a bad case of deja vu? If you got behind in payments once, what makes you think it won't happen again? You have to look at your situation and decide on whether or not it is financially smart to put yourself in a situation where you are going in circles. The economy is bad, and it is a fact that people owe way too much on their homesk, and they need to work out an agreement with their lender where they don't end up being stretched to the limit paying thier mortgage.
The alternative to a forbearance agreement is doing what is called a Loan Modification. A loan modification is an agreement where the lender agrees to reduce to the borrowers interest rates to an amount reflective of their income, and if you know how to present your case to your lender, you, as the homeowner, can get a mortgage principle reduction. But as just mentioned, you have to know what you are doing!!
You can't just call up the lender and say, "hi mr. lender, i cant afford my mortgage anymore, give me a 3 point reduction on my interest rate!', the lender will literally hang up the phone on you! You have to know what to say and how to package your information in way that will make the bank take you serious. After all, it is not your fault that the market crashed, and you deserve a chance at success. Learn all you can about loan modifications and save your home from foreclosure!! Visit us today at http://www.homebuyerforcash.com
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I did a forrbearance modification with wells fargo. Before I was never behind on my mortgage monthly payments. A wells fargo represenative presented to me that i will not have to pay my mortgage for 6months and the cost would be added on to the end of my mortgage. Now the 6months is up and their telling me i have to pay $16,000 or I will lose my home
Beth -
I have heard this alot, especially with the trial modifications.
I have some great contacts at Wells - If you want to send me your detailed situation, I can forward this to them. In many situations, I have been able to assist my clients in getting resolution vs not knowing what is going on.
Let me know if I can help.
BOB, MBA, CDPE, ePRO
bob@inspiragroup.com
I have the same situation with First Horizon i never missed a payment and was put on a loan forbearance for 6 months ended dec 1st 2009 they wanted a ballon payment or to resumit my finantials to see if i qualify for a loan modification. I tried to resumit during the forbearance and they made me wait till it was over so they have just stared on dec 16th2009 my new application and i have heard nothing, Meanwhile now they say i am 6mo behind in payments and they will not except any payment except all in full. I started with not even 1 late payment and now i am in fear of forclosure. I dont know what to do. Everytime i call they say hold onto your funds. I wish they would take a look at my finantials meanwhile they are charging interest on the money everymont there is no payment??? Ocean
Ocean:
My situation is IDENTICAL to yours - same lender and all. Today I have tried to get through to them, and their phone line is busy. You always get difference people who really don't know what the last person told you. I was (verbally) advised I would definetly get modified because I made all of my payments on the forbearance agreement on time. I have the persons name that I talked to, and the date, but that is not doing me any good. I would advise someone not to get a forbearance agreement, unless they will definetly have the funds for the missed payments after the term.
It is really important to read all of the terms before you sign a forbearance agreement. I am a little confused as to why they had you sign a forbearance agreement when you were seeking a modification? You may want to talk to a HUD Approved Counselor about your file (you can find one in your area by going to www.makinghomeaffordable.gov) or consult with an attorney.
i also have a similar issue. I am suppose to be represented by
my "attorney".i filed a loan mod program since Nov. and was advised by some people not to pay my monthly mortgage (eventho i could have) if i was in a loanmod prog.I was informed by the processor that i was approved for the "trial mod" just this April. she even quoted me the figures of the scheduled pymts.and where to mail it toand i should start paying them this coming May 1. she also mentioned that i will be expecting a packet from Chase. I rcvd, a packet from Chase via Fedex, but to my surprise it was a Forebearance agreement w/c also gave me a diff quote of scheduled pymts.I called her & told her what i got. Now she told me that she will forward and mention it to my lawyer and not to fill out and submit the form since it is not the one that they have negotiated. now i am confused why I wassent this kind of form, and it is scarry because they are saying that they will eventually foreclose the property if i dont make this pymts. now, i am thinking of firing my lawyer because it took them so long to give me a result and they dont seem to follow up w/ my status. i am running out of time, please help me. i dont want to loose my home. thank you.
You have hired the attorney to represent you and unless you feel that they are not doing their job then let them negotiate on your behalf. You can always talk to your lender to confirm what the attorney is telling you. You are doing the right thing in reading all of the documents and making sure you understand exactly what is happening. It is very important to stay involved in the process and completely understand anything that you sign.
I am behind 2 payments with Bank of America. We have a FHA loan, which was thru Taylor,bean,whittaker but BOA took some of their loans over since Taylor was taken over by the FEDS. I have requested a modification and was told by BOA home retention team that the negotiator did put a workout plan in the system to pay $1883.79 a month starting May 2010, but then that workout was cancelled stating "disregard trial period more information later. I need to know what to do now. Should I get in touch with the CEO to see if they can do something about this? The negotiator received our paperwork May 2010 and we were told it take 30 days.
Thank You
The only thing you can do is to continue to follow up with them. Document all of your conversations. If you feel that you are not getting any answers you can ask for a supervisor. The process does take time.
After a pre-trial period of 4 months and bankruptcy, had to start over with the process, I started with WAMU. Second approval was a government modification, BUT quality assurance wouldn't approve it, assuming this is investor. Back to the drawing table. Keep in mind the difference between the two was $1000. Called Chase Friday, I faxed them a letter/complaint I was finished with them ready to walk. Now they are doing a forebearance starting in September for 6 months for the amount close to the first modification. My house is about $50,000 negative equity, am I going to get swindled here with the forebearance? Why would Chase do a forebearance and not a loan modification? Do I need to hire an attorney, should I do an audit? Would the first loan with WAMU make any difference? Need help?!
Hi Karyn,
You will want to make sure that you read the terms of the forbearance agreement carefully. Pay close attention to the repayment of any past due interest. You will also want to carefully read the delinquency clause. In the past we have heard that if you are late on a payment (outside the grace period) that they can proceed immediately with the foreclosure by issuing a Notice of Trustee Sale (provided that the Notice of Default had been filed at some point in the past). You may want to seek legal advice once you received the agreement to make sure that you completely understand the terms prior to signing.
My lender is Suntrust. I just got forbearance agreement from them yesterday. Should i sign it?
I am current with my loan at this point. No late payment ever.
my monthly payment right now is 1277, but the forbearance agreement is 1550 for 4months start Sep 1st to Dec 1st. Because the payment is higher, so i call them to ask what is going on, they said the payment is including my Tax and Insurance(since i am under MOD process, they have to take over my property tax and insurance). Is this normal? should i sign it? the agrement only has same plan payment for 4 month, it didnt say anything about what happend after that, or if i should pay a ballon payment or not... So i am so confuse... any help /re is good..
Also, if i do sign the forbearance agreement, will it hurt my credit?? since i always current w/ my payment, so i dont want to do this and hurt my credit...
THX in advance...
Hi Scott,
Are they only adjusting your payment for 4 months? Are they changing any of the terms of the loan like the interest rate? Can you be more clear on what the benefit is to you as outlined in this agreement? If it is only for 4 months and does not benefit you do not sign it.
That is why i am confuse about.. Cuz they didnt detail what is going on. To my understaning, the 4 payment is base on regular loan payment and my tax n insurance. On the agreement(one paper only) has nothing regard why it $1512, what dose pln paymnt include, what is the rate or term. As I mention, i call them to find out why is the amout, Even the Mitigation customer service said usually it should detail how it calculate the plan, but they did said that after the trial payment, the MOD term and paper work MAY then finalized. So you think i shouldnt sign it? becasue there is no term invole? or ?? Thanks again for your response..
If is okay w/ you... can i send the copy to you.. so u can check it out?
Hi Scott,
Do you have an experienced real estate professional, attorney or financial advisor you can contact to have them review the document and your complete file? If you do not you may want to see if you can find a HUD approved counselor in your area that you can show this and all of your other documents to (including the pending modification paperwork). You can find a FREE HUD approved counsellor by going to makinghomeaffordable.gov.
It is not just this document that needs to be reviewed, you would need someone to look at all of your paperwork to get a clear picture.
I am not an attorney so I could not provide you with the advice that you need.
thx!!!!
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