question about balloon payments/permanent modds

[deecee]

I see that a few of you have gotten permanent mod offers :woot: that have hefty balloon payments at the end. Is my understanding of a balloon payment correct in that at the end of the mortgage term, you will have to pay an enormous sum of money? Is this the standard in the mods that are being offered?

[MyHAMP]

Originally Posted by deecee

I see that a few of you have gotten permanent mod offers :woot: that have hefty balloon payments at the end. Is my understanding of a balloon payment correct in that at the end of the mortgage term, you will have to pay an enormous sum of money? Is this the standard in the mods that are being offered?

Yep, that amount is due when you re-fi, sell or pay-off early.
But not everyone needs a balloon/forbearance. Do you know the "waterfall-method" under HAMP? That determines the forbearance-amount (if any).

[deecee]

ah, so if there is no principal forebearance, then no balloon payment at the end? that makes more sense...

[MyHAMP]

Originally Posted by deecee

ah, so if there is no principal forebearance, then no balloon payment at the end? that makes more sense...

Yes, decee, absolutely right!

Principal Forbearance = Balloon Payment (in HAMP)

[rsar999]

mine also has a Deferment 13,500. However this amount is not gaining any interest and I fugure I have 27 years to worry about it. I assume they have to do this on some mods to get the payment to the 31%, this way they are not losing any money.

[MyHAMP]

Originally Posted by rsar999

mine also has a Deferment 13,500. However this amount is not gaining any interest and I fugure I have 27 years to worry about it. I assume they have to do this on some mods to get the payment to the 31%, this way they are not losing any money.

Correct.
In our case that amount would be close to $350,000...

[rsar999]

350,000? even if the extend to 40 years?

[MyHAMP]

Originally Posted by rsar999

350,000? even if the extend to 40 years?

Yes, even at 2% initial APR over 40 years.

We passed the initial NPV-test...now go figure how the market is doing in our area...

[rsar999]

my hamp- im confused? my new principal bal is 97,000 or so with the 13,500 principal deferment. my term is 27 years (didnt extend) are you telling me that you would have to defer 350,000? and be extend to 40 years with the 2% int rate?

[MyHAMP]

Originally Posted by rsar999

my hamp- im confused? my new principal bal is 97,000 or so with the 13,500 principal deferment. my term is 27 years (didnt extend) are you telling me that you would have to defer 350,000? and be extend to 40 years with the 2% int rate?

That's how my HAMP "waterfall" looks.

I'm curious why they didn't extend your loan to 40 years instead of a principal forbearance?! Usually, they would reduce interest first (down to as low as 2%), extend the term to as long as 40 years and forbear principal only at the last "solution".

Yours is the first HAMP I've seen that has a forbearance and does NOT have a 40-year term.