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.