Saturday, October 16, 2010

Mortgage modifications - Beware

Banks are up to their usual tricks. They have now turned their sinking mega-ship to suddenly offer mortgage modifications to people they once treated like dirt. There is plenty of anecdotal evidence of a sudden surge in mortgage modification activity. This includes my neighbor who shared more information with me this week about her situation.

Think about it. What better way to circumvent the foreclosure-gate process than to get foreclosure people into a new loan with proper paperwork which would enable a flawless future foreclosure? (Most mods still end up in default). Home debtors under a new modification would effectively reaffirm their debt, the old flawed mortgage would go away and the bank would get a sure way to foreclose problem free. By giving new mods, the bank also releases itself from the potential of having to buy back the old, bad debt. Until now banks have steadfastly refused to do many mods.

Remember, if it sounds too good to be true, it is just that. Beware of bankers bearing what seem to be gifts. If you have received a modification approval in the last few weeks after months of waiting, or even a sudden invitation to apply, get with an attorney -- even if you have to scrape the money together. Know your legal options. This goes especially for foreclosure candidates, but also for people who are paying on time who may suddenly find themselves enticed their bank to do a  refi. Demand the note!. More indication of what a mess things really are.

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