financialcounselor

Don’t Miss a House Payment in Hopes of Getting a Loan Modification

In Uncategorized on August 6, 2012 at 11:28 pm
As this housing and foreclosure crisis drags on, I know that a lot of people are desperate to get help with their mortgage. Of course there are assistance programs out there that lower people’s mortgage payments, such as the government’s Making Home Affordable loan modification program, but who gets accepted into them is a decision made on a case by case basis by each mortgage company. One policy that some mortgage companies have, or they tell people they have, is that they only modify loans that are past due. And I know that a lot of times mortgage company employees will instruct a homeowner to miss a payment or three so they can be eligible to get help.
For a lot of people, the possibility of a lower house payment can be a big temptation to intentionally fall behind on their mortgage even if there is money to make the payment.
Don’t do it.
For example, I spoke to a man named Rich who was told exactly this by his mortgage company. So, Rich did what the person at his mortgage company told him to do. He stopped paying his mortgage for three months, then he called and told them he’d like to have his loan modification now. You know what happened? He didn’t get a loan modification. His house went into foreclosure.
Rich was irate when he called me up.
“I just did what they told me I had to do if I wanted a lower payment,” he said. “Then they put me in foreclosure for it? What the hell kind of scam is this they’re running?”
You would not believe how often I encounter this. It’s incredibly common. When a client asks me if they should stop paying their mortgage in the hopes of qualifying for assistance, I always give the same answer: “Not if you want to keep your house.”
There is nothing in the government’s housing program that says borrowers must be behind on payments to be eligible for the program. And yet I’ve heard employees at mortgage companies say to my clients that that is the case. I don’t know why they tell people this. Maybe they’re misinformed. Maybe they’re crazy.
But if you’re somebody like Rich who was told by their mortgage company to skip a payment in order to get help, don’t do it.
Not if you want to keep your house.
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