modification not what I expected

[panther]

I just heard from NACA and BofA offered a modification that is 100 bucks higher than my previous payment. What should I do? I don't understand why?

[kateistired]

With a standard modification, all that they do is put your past due back in to the loan, which increases the amount of your loan with CW. This in turn will increase you payment. If you are not past due, or your received some sort of interest rate reduction but your taxes and insurance were not escrowed before and they added an escrow account, this could also raise your monthly payment.

Sometimes this is the only mod you qualify for, sometimes not. I only qualified for a standard modification with CW, and my payment went up about $90 immediately because of the past due. That worked for our family, because we could afford our payment all along, just had a temporary set-back that caused us to get behind.

[gray517]

Originally Posted by panther

I just heard from NACA and BofA offered a modification that is 100 bucks higher than my previous payment. What should I do? I don't understand why?

You would need to post more details about your current loan and the modification offer for someone to be able to give you an answer, but it could depend on alot of factors that would make your payment higher for example, what type of loan did you have before the modifcation? If it was an interest only loan then when you take into account that you will be now paying interest and principal even with a lower interest rate that could make your payment higher. Any time you get a modification, the lender will add the interest portion of any past due payments into the loan therefore making your loan balance higher this could also account for a higher payment. Also if you did not have an escrow account prior to the modification the lender could now be requiring you to have one on your loan this would also increase your payments.

[panther]

I am behind on my payments about 7 months. We did have some decrease in income, not a lot though. Did you guys go through NACA. I just want it to be the same or a couple hundred lower, that would enable us to keep our home in the long run. Has anyone rejected a NACA offer and got another one. They gave us the same interest rate. It was a fixed rate.

[sarge]

Panther,

My mod was from an interest only loan to a fixed. They lowered the interest rate added an insurance policy required here in a coastal county of NC(wind and hail) to the escrow and my payment went up minimally. I look at what it saved me though as my payment was set to go up $500 in 2013 and it will save me $120k over the life of the loan.

[gray517]

Originally Posted by panther

I am behind on my payments about 7 months. We did have some decrease in income, not a lot though. Did you guys go through NACA. I just want it to be the same or a couple hundred lower, that would enable us to keep our home in the long run. Has anyone rejected a NACA offer and got another one. They gave us the same interest rate. It was a fixed rate.

They will add on 7 months of the interest portion of your payment to your loan balance, and most likely 7 months worth of the escrow portion of your payment (if your account is escrowed) increasing you loan balance and with no interest rate reduction, this would explain the increase in your payment. This is the standard way all modifications are done regardless of the lender or how you go about getting the modifcation. Many people on this forum got loan mods with Naca, I actually got 2 modifcations in the last year from Naca. They (naca) base their proposal to the lender off what you can afford based on your income and expenses such as car, insurance, food, utilities and other secured debt.

[panther]

Thank you so much for your reply. The thing is, Naca came up with a way lower payment than what BofA came up with. I just hope it all works out.