It is called a Loan Modification
A procedure whereby a loans payment plan is altered due to the hardship of the borrower. This can include the rate, term and monthly payment amounts.
Current Balance: $200,000
Arrears: $20,000
Attorney's Fees and Foreclosure Costs: $7,000 Total: $227,000
In this down market, let's assume your home is worth $210,000
If the bank forecloses on you and your home goes to Sheriff's sale, it will most likely
only sell for 65% of it's true value, or $136,500
So, the lender has received $136,500 for your home that you owe $227,000 on.
$227,000 -$136,500 = $90,500 Loss
-OR-
They renegotiate your contract for you and save themselves a lot of money.
-Let's assume they ask that you send them $2,000 in good faith
-They forgive part of the entire s ($27,000) by let's say $10,000
-They roll the other $15,000 onto the back of your loan, increasing its balance
-They lower, and FIX, your interest rate to a reasonable level
-They stop the Foreclosure process
Let's assume your new payment will be $1,400 at a fixed interest rate.
In just the first 2 years, they'll receive 24 pay payments of $1,400, or $33,600.
So, yes they will receive less than what your current contract states, but as you can see:
After forgiving $10,000 in arrearages, they saved $90,500 by letting your home go to Sheriff's sale and gained an additional $33,600 in payments just in the first 2 years.
That's a total of $124,100!!!
The same holds true if they renegotiate your contract just to keep you with their company.
Example over a 5 year period:
If they drop your $1,200 payment to $1,000, yes they will lose 60 payments at $200, which is $12,000 but they will continue gaining the $1,000 each month for 60 months, which totals $60,000.
Banks Save Thousands and Thousands of Dollars !!!
Most importantly, you get to stay in your home and at a monthly payment that is now manageable.
Contact your bank and/or your real estate professional to help you through a difficult , but manageable process.
Make sure you work with a Phoenix Realtor or Scottsdale Real Estate agent who is experienced with short sales and bank owned transactions.
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Copyright © James Wexler *Loan Modifications for Phoenix AZ real estate*
If you are listing your home as a short sale in Phoenix Arizona or Scottsdale Arizona make sure you hire an agent who knows how to do short sales and has the experience to get the job done.
Call 480.221.8080 to find out more about Phoenix AZ Short Sales and Scottsdale AZ short Sales
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