Loan modification enables distressed mortgage holders to reduce their principal and interest. But statistics show many American mortgage holders cant tap into the benefit of loan modification.
According to a Wall Street Journal piece on mortgages,
Most delinquent mortgages aren’t available for sale because they are locked up in so-called private-label securities (the ones packaged by Wall Street during the boom) or in the hands of Fannie Mae or Freddie Mac.
What this means is, Although a mortgage company has issued the loan, the loan is owned by third parties. The rules governing this arrangement prevent the issuer from modifying the loans. A modification would subject the servicing firm to the risk of lawsuits by the owners of the securities.
Because of this tight arrangement the mortgage companies find their hands tied and they cant help their borrowers.
written by Constantine Njeru
\\ tags: American Mortgage, Boom, Borrowers, Delinquent Mortgages, Fannie Mae, Freddie Mac, Lawsuits, Loan Mortgage, Mortgage Companies, Mortgage Company, Mortgage Holders, Mortgage Loan Modification, Principal And Interest, Private Label, Qualify For Mortgage, Tap, Third Parties, Wall Street, Wall Street Journal, What This Means
Mortgage owners who cant keep up with monthly payments are making a drastic decision by walking away from their mortgages. Mortgage companies refer to it as strategic default.
Walking away from a mortgage can be in your own best financial interest, after all big real estate companies do this every day. But before you make that decision make sure you are familiar with your states rules on mortgage defaults. Some states are pro borrowers while others are pro lenders.
Some Risks and Cost associated with walking away from a mortgage
- In certain states, a borrower can be sued and personal assets can be subject to a deficiency judgment.
- Once a mortgage goes into default, a borrower’s credit rating is severely tarnished, making it more expensive, if not impossible, to qualify for any new form of credit.
- anything that involves a credit review, such as obtaining auto insurance or getting a new job, can be complicated.
Before you make the decision to walk away from your mortgage consider the above cost. Everything in life has risk
written by Constantine Njeru
\\ tags: Auto Insurance, Borrowers, Credit Rating, Deficiency Judgment, Drastic Decision, Financial Interest, Insurance, Lenders, Mortgage Companies, Mortgage Defaults, Mortgage Mortgage, Mortgages, New Job, Personal Assets, Real Estate Companies, Risk