New Loan Mod: Tell what you think, please!

[Ann]

Hi all,
I will be filing in late December for either a 7 or 13... still haven't retained attorney...just interviewing with them... was just approved for a loan mod on my second mortgage and was wondering what you think of the terms of this... here goes... it's pretty lengthy but I will consolidate and ask that even though I know you are not lawyers you know a lot of the whole bankruptcy process and just need your opinions please...
1. Reduced monthly payment from $708.00 to $354.00 for 12 months.
2. Reduced interest rate from 6.74% to 2.100% fixed for 12 months.
3. Extended the term to 240 (was 180 and have been paying for 4 years already) beginning with the new reduced payment.
4. Brings my account current (was 3 months behind and need to be current to file for 7 in December) immediately.
5. Waives all outstanding late fees (have been late every month for a year)
6. Heres the part I'm worried about... The permanent interest rate after the first 12 months of 2.100% will be determined as set forth in the note in effect before the Addendum was signed. Does this mean the 6.74 %? and what they will do is use this percentage rate to determine how much my payment will be when there is 19 years left on the loan?
Sorry, I know this is long but what do you think? There is NOWHERE in this contract that states bankruptcy will bring this void if filed. Please reply. Thanks!

[keepmine]

At the end of the day, is the home worth saving? Do have negative equity?

[walkthaplank]

6. Heres the part I'm worried about... The permanent interest rate after the first 12 months of 2.100% will be determined as set forth in the note in effect before the Addendum was signed. Does this mean the 6.74 %? and what they will do is use this percentage rate to determine how much my payment will be when there is 19 years left on the loan?

This is a question you need to ask your lender. Nobody but them can answer it correctly.

[Ann]

Thanks for your input. I did call my lender and yes, my payments after the twelve months will be based on the 6.74% rate that it is now but with a longer loan term so my payments will be approx. $530.00 after the 12 months are up. Currently they are $708.00. No, I have no equity. Is the house worth saving? Yes.. it is my home and renting where I'm at is probably higher than both mortgages put together!

[hereforinfo]

Then it's a no-brainer. Go for it.

[StartingOver08]

Ann, make sure you understand the note you are signing. The terms of the loan MUST be in the note. The modfication will spell out the terms. Do not rely on a phone jockey to tell you the right thing. Look at your NOTE modification.

[poorold]

the loan mod doesn't probably matter. if you do a 13, it sounds like you will be able to get rid of the 2nd anyway.

[jadams]

Are they just extending the term, or are they extending and resetting?

It doesn't sound very good. But your original terms aren't bad, so there isn't really much to work with.

You're adding a lot of years onto your loan for $175 savings.

What's the loan to value like on the property? Is it possible you could do a 13 and strip the second?

As long as there are no fees, I guess you don't have anything to lose by accepting it. You could always pay extra to make up for the longer term if you change your mind later.

But make sure you've run your finances and are sure the new amount fits within your budget. Once you file and reaffirm, you're stuck.

[no_it_all]

1. Reduced monthly payment from $708.00 to $354.00 for 12 months.
2. Reduced interest rate from 6.74% to 2.100% fixed for 12 months.
3. Extended the term to 240 (was 180 and have been paying for 4 years already) beginning with the new reduced payment.
4. The permanent interest rate after the first 12 months of 2.100% will be determined as set forth in the note in effect before the Addendum was signed. Does this mean the 6.74 %? and what they will do is use this percentage rate to determine how much my payment will be when there is 19 years left on the loan?

A monthly payment of $708 @ 6.74% for 180 months means you originally borrowed about $80K

After 4 years of payments, your balance is around $66,000.

Sooooo..what you now have proposed is a 20 year (240 month) loan at 2.1 percent. The payments on that are around $337 month. At the end of 12 payments, you will then owe the bank $63,000 or so. Since the bank is quoting you a higher monthly payment, my guess is you have made either less than 48 payments on the original loan or the bank is adding some small fee to the new loan.

Your interest rate then goes back up to 6.74% for that $63,000 balance. Payments will be around $490 month for nineteen years.

Three years from now if you don't change anything, you will have paid ($708 x 36 months) $24,500 and still owe $52,000.

Three years from now with the new proposal you will have paid $15,800 and still owe $60,000

These figures are accurate assuming your current balance is $66,000