Received Modification Papers Today, WT...

[puglug]

I received my modification agreement today. I'm very confused.

I see that the interest is the same as before @ 8.375. I thought the interest through the HAMP program was going to be 2% and then adjust upward til it reached the market rate currently or what it was when I applied for the loan modification.
My new principal balance on my loan is 355,242.68, which is about 12,000 more than my original loan of 342,400. That's not the problem.

My paperwork shows Years for loan 1-28 with 325 payments of $1573.34 total monthly payments.

It shows that a final balloon payment on the interest bearing principal balance of $107,393.39 is due on the Maturity Date.
Does this mean that after 325 payments of the $1573.34, I owe another payment in the amount of $107,393.39.

Then on the next page it read the following:

The deferred principal balance of $198,242.68 will be due as a balloon payment on the earlier of, payoff of the interest bearing principal balance, transfer of the property or on the modified maturity date.
Does this mean that after the 325 payments of the $1573.34, that I have another balloon payment in the amount of $198,242.68. Meaning that after I pay 325 payments of the $1573.34, that I have a combined balloon payment in the amount of $305,636.07.

Is this a horrible deal? It sounds aweful to me.

Andrea

[taxpayer]

Thats a terrible deal, sounds like the lowered the pmt a little only to add a bunch onto the principle with a balloon at the end. Plus as you said, the rate is way to high. I would not take that offer.

[Garry]

Sure doesn't sound like hamp to me, where you on a hamp trial?

[puglug]

Sure doesn't sound like hamp to me, where you on a hamp trial?

Yes, I was on a HAMP trial. I have some new information what I think is going on. I talked to 3 individual bankers to get their opinion on this and 2 of the 3 couldn't figure it out but the 3rd one kinda did.

He said it looks like in order to get the payment at the $1500 mark for 325 payments, they had to defer $198,000 of the loan until 2037. As it was explained to me, this is interest free. The 107,000 that is also due is interest too. If I make an extra $100.00 a month payment towards the loan, this will get paid off. So in order to pay the 198,000 at the end of the loan, I would need to save so many dollars a month and collect interest on it and then pay the deferred amount when it's due. So after some figuring, I am saving $500.00 off my mortgage each month free and clear and get this interest free $198,000 until it's due.

So this is what we think this all means. I'm not for sure until I talk to the loan company, but then who knows if I'll get a straight answer. If 3 separate bankers couldn't say for sure, how will I know what I'm signing.

Andrea

[puglug]

Sure doesn't sound like hamp to me, where you on a hamp trial?

Yes, I was on a HAMP trial. I have some new information what I think is going on. I talked to 3 individual bankers to get their opinion on this and 2 of the 3 couldn't figure it out but the 3rd one kinda did.

He said it looks like in order to get the payment at the $1500 mark for 325 payments, they had to defer $198,000 of the loan until 2037. As it was explained to me, this is interest free. The 107,000 that is also due is interest too. If I make an extra $100.00 a month payment towards the loan, this will get paid off. So in order to pay the 198,000 at the end of the loan, I would need to save so many dollars a month and collect interest on it and then pay the deferred amount when it's due. So after some figuring, I am saving $500.00 off my mortgage each month free and clear and get this interest free $198,000 until it's due.

So this is what we think this all means. I'm not for sure until I talk to the loan company, but then who knows if I'll get a straight answer. If 3 separate bankers couldn't say for sure, how will I know what I'm signing.

Andrea

[Daisy Cutter]

these NON INTEREST bearing balloons are a great deal imho. Yes your interest rate stayed the same but only on the part of the loan that you are actually paying interest on, which means your actual interest rate (if you really take into acct the amt of the loan) is much less. Only some banks are doing the forbearance on HAMP and it sounds like you have a bank that is doing it, this will save you a great deal.

I know it is scary to think you owe a huge balloon payment in 2037 but think of it this way, 27 years ago was 1983, houses in my area were literally 1/10 the cost they are today, then. If somebody offered me a loan in 1983 for a $150K house with a $75K balloon payment in 2010 I would have been scared to take it also.

[puglug]

these NON INTEREST bearing balloons are a great deal imho. Yes your interest rate stayed the same but only on the part of the loan that you are actually paying interest on, which means your actual interest rate (if you really take into acct the amt of the loan) is much less. Only some banks are doing the forbearance on HAMP and it sounds like you have a bank that is doing it, this will save you a great deal.

I know it is scary to think you owe a huge balloon payment in 2037 but think of it this way, 27 years ago was 1983, houses in my area were literally 1/10 the cost they are today, then. If somebody offered me a loan in 1983 for a $150K house with a $75K balloon payment in 2010 I would have been scared to take it also.

I took the deal and will put aside the extra money. It's scary but to know that I have an interest free 200k loan on a 355K loan is probably a good deal.