Imagine, you can lower your monthly mortgage payment to within 31% of your gross income? To a great many homeowners this represents as much as a $1,000 or even $2,000 per month. Interest rates are being reduced to as low as 3.5% in some cases for a 5 year period. Sound too good to be true? It is time to Hold Your Nose!
The government rescue for homeowners is too good to be true. What lenders are not broadcasting to the public is the fact that loan modifications have a heavy impact on your FICO score. What some homeowners are discovering after the fact is the lender reports these “under payments”on your mortgage each month to the credit agencies while you are in the program.
Those concerned about their FICO score and who try to improve it as much as they can will find the loan modification process an equal opportunity destroyer, equivalent to the same impact your FICO would have if you went into foreclosure. The impact of this “under payment” could lower your score to below 600 which then would trigger all of your credit card companies cutting off the use of your cards. So, instead of saving yourself a thousand dollars or more a month on your mortgage the lender just had you commit Hara-Kari.
After signing one of these modifications, if you manage to get one and few have been issued, lenders who received tens of billions of dollars in bail-out money are still holding onto to that cash. The lender treats the loan modification as a test in the first 3 months and in some cases 6 months, to see if you can still manage your financial affairs before making the loan modification permanent for 5 years… after which the loan reverts back to its original interest rate.
Surprise #2, if your homeowners insurance and your property taxes are being paid when due, you can kiss that convenience goodbye, the lenders of loan modification demands an impound account. So your monthly payments come down a $1,000 dollars and immediately go back up by $500 dollars. Please do not pee on my leg and tell me its raining. And please, do not expect lenders who got billions in bail-out money to reduce your principle balance any time soon. Not when they have a sucker like you born every minute who seems to believe in the tooth fairy. Think of banks and lenders as vampires, they will suck you dry at every opportunity. Some of these gangsters are really nice, as they take their hand out of your pocket.
The $50 Billion Obama Loan Modification program is just another Washington political Ponzi scheme with all of that warm and fuzzy feeling of our government reaching out to help desperate people who are losing their homes. If you believe Barney Frank and Christopher Dodd, then I have a bridge for sale in the Mojave desert.
In the Los Angeles Times today they report that Bank of America, Wells Fargo, JPMorgan Chase, and U. S. Bank like the oil company charlatan all simultaneously decided to lower their penalties on overdraft accounts. Not much attention is paid to the fact that these institutions earned over $38 billion this year on such fees, an increase of 100% in the past ten years. These vampire banks are no different than the criminals on Wall Street who always stuff their pockets and pay their outrageous bonuses before showing any conscience toward their clients.
This might be the time to seriously think about moving your money, what little you have left, to a small independent bank who would appreciate your business. You might even discover that these small banks still believe in that old fashioned idea called “customer service.”