The re-default rate of loans modified in the first quarter of 2009 was 51.5 percent by the end of the year, according to the Office of the Comptroller of the Currency and the Office of Thrift Supervision.
“Borrowers were more likely to re-default when their monthly payments aren’t reduced enough in modifications to make staying in a home affordable. Our data show that when you reduce payments by 20 percent or more you have a tendency for lower re-default rates,” said Herb Allison, Assistant Treasury Secretary.
This is bad news for Fairfax VA homeowners. But why this is happening? Because many homeowners get desperate and accept a loan modification that they can’t afford.
Before you start the loan modification process, review your budget and decide what rates would be affordable for you each month. Figure out the highest monthly payment you can accept and make sure you don’t exceed that amount during discussions. If you can only afford $800 a month, then don’t accept a $1,200 payment.
The second loan modification is a lot more difficult to obtain. Lenders are hesitant to reduce your payment a second time, because they think you’ll just end up defaulting again.
I also recommend that you review all your options to avoid foreclosure. Start buy researching the local housing market. Many people here have been able to rent a Fairfax VA home for much less than their mortgage payment. I heard of one couple who owned a house with a $1,400 monthly mortgage payment. The home’s value had dropped by 50% and their lender wouldn’t reduce their payment.
The couple was able to find a nicer house to rent for $850 a month. This is one option. If you want to keep your home, however, you need to hold steady and negotiate for a loan rate that you can afford.
Not being able to afford your home significantly decreases your quality of life: You are stressed out, you and your spouse might argue over money, your financial problems might impact how much you’re able to focus on the job and you could risk getting let go. That’s why it’s so important for you to make sure your home loan is affordable – so it doesn’t start affecting other areas of your life negatively.
Our Fairfax loan modification kit has the instructions you will need to get a loan modification approved. We show you how to prove to your lender that they will make more money by accepting your loan modification versus foreclosing on the house. They’re in the business of making money, right?
Thanks for reading this,
Thierry is a Real Estate Agent at RE/MAX Premier, and Host of Talk Radio’s, ‘Inside Real Estate’
Phone: (703) 322-0600.
Thierry Roche specializes in loan modifications and short sales in Fairfax Virginia. Fairfax Loan Modification Help. Fairfax Short Sales. Fairfax Short Sale Realtor. Fairfax County Short Sale Realtor. Fairfax VA Short Sales. Fairfax Realtor.
Copyright 2011 Inside Real Estate, LLC. All Rights Reserved.