Loan Modifications Set to Expire Beginning This Year

Modification Fail

“Modifications granted in the early years of the real estate meltdown may see bigger increases because interest rates were higher then. While just 34,440 loans were modified nationwide in 2009, that jumped to 311,680 in 2010.”


Florida loan modifications set to expire beginning this year

Hundreds of thousands of homeowners nationwide and in Florida will be hit with higher mortgage payments as loan modifications granted during the early days of the housing crisis begin expiring this year.

The federal Home Affordable Modification Program, which has reduced interest rates to as low as 2 percent for nearly 900,000 struggling borrowers, has a five-year shelf life before resetting. The first modifications were granted in the fall of 2009, meaning they will start to expire in September.

In Florida, monthly payments could increase by as much as $1,168, as the lowered interest rates grow at a pace of 1 percent per year until they reach the level they were at when the loan was modified.

But the median increase statewide is expected to be much smaller — about $162 per month — according to a report by the Inspector General of the Troubled Asset Relief Program, or TARP.

Federal officials and homeowner advocates are concerned what will happen as modifications expire and are warning borrowers who may not realize their payments are about to increase.

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Combine this with all the 2nd mortgages (10 year interest only) fully amortizing and you have a recipe for disaster.


3 Responses to “Loan Modifications Set to Expire Beginning This Year”
  1. Incognito123 says:

    Can’t modify what is not owed in the first place.

    • Bobbi Swann says:

      Nice to see you back in the forum! I should have added your comment as a #1 however, there are still folks out there who have not been able to comprehend the aspects of the secondary market, MBS’s and the like to understand that for the most part once that occured it nullified obligation in the first place.

  2. Bobbi Swann says:

    So sorry folks. This is EXACTLY why I have been dead set against modifications. For the most part, none of them are even ‘true’ modifications since I estimate about 99% of them are never recorded in public records. Second, your allowing the lender to ‘escape’ through the bars of fraud. Third, you’re just setting yourself up for another foreclosure default. Most of the HAMP modifications were neg-am so the principal balance has been RISING over the last 5 years. There are some solutions in some cases, depending on whether or not there is any equity (as in NOT underwater) in the property. There are those who may be able to refinance the curent HAMP mortgage if the modification payments have been made timely. There were a lot of variations in the HAMP modification program so not all borrowers have the same situation. I would consult a mortgage broker as they have a wider array of programs to offer versus a bank or credit union. If none of these options are available to you, we are looking at yet another financial crisis to hit the market when those re-sets hit in September and defaults start the clock 90 days later. January 2015, I predict, will be the ‘hottest’ month of the year everywhere in the USA.

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