Loan Modification: Why You Probably Won't Get One. Indy Mac

Good post -- you hit the nail on the head.

Stephan - Thank you for sharing an informative and helpful article.

John

Steven I'm way past thinking banks will start doing loan mods.  Home sellers if they are unable to afford their mortgage are better off short selling and moving on with their lives (in most cases).  Getting a loan mod - sure you bet....not going to happen.  I know many sellers that tired a loan mod and are now short selling to hopefully keep their credit as best as possilble in an unfortunate situation. 

As a Realtor, of course I think the shortsale is the best solution for distressed homeowners - especially those way upside down on their mortgages. In the past 2 years however, two of my shortsale listings have been offered a loan modification out of the blue (I guess based on the shortsale package submitted since the paperwork is the same) both accepted the banks offer and they are currently living in the homes and the foreclosure proceedings have been stopped. Perhaps it was when the bank saw how far the price had fallen with the BPO that they realized the wisdom of getting the homeowner to go back to paying their outrageous payments.

Loan Mods?  They are giving them out to everyone here in Phialdelphih, PA.  We have a court administered program that requires the lender to offer a loan mod based on what a housing counselor says they can afford.  I would say 60% of residential mortgage foreclosures here get "temporary loan mods." 

Of course the program is less than  2 years old an the anticipated rate of redefaults on modified loans here is about 80%.  We will get around to short sales soon if the economy doesn't get better all of a sudden.