Received Loan Mod BUT they want to add my interest to the principal???

[reneem]

I just received my loan mod paperwork today and they want to add all delinquent interest, 4 months of taxes, late fees and a $500 loan mod fee to the Principal balance. Is this normal? I don't want to sign this as my current loan balance is $654,918. With the loan modification, it will increase to $672,873 and the current value of the home is around $600-610K. I already sent in a $4000 good faith payment. What should I do? Any thoughts? Why wouldn't there be any interest forgiveness? Help....

[Dan Bailey]

reneem,
Like *** says, the modification is up to the investor...but I wonder if it wouldnt hurt to call them and try to get rid of at least the "modification fee". The taxes do have to be paid though for sure.

[reneem]

Thanks! I have been trying to get the escrows waived as they are charging me almost $1700 a month for taxes when they are truly only $1097. I could pay them myself. There is a $2600 balance in the escrow bucket currently. They say they need more in there, I guess for a 2 or so month cushion but it's $600 a month that could be used elsewhere. I get a different answer everytime I call regarding cancelling the escrow- I need to find my docs. I requested them again but have yet to receive them. I know escrows are not required.

[Moe Bedard]

If you had past due payments............even if they were interest only......they were due and payable as a part of the mortgage note and instead of asking for them up front like they would in the event of a foreclosure to redeem the property..............in the situation of a modification they are able to put that amount back into the principle balance so you wouldn't have to pay it all up front.......

For the escrows..............did the lender have to pay delinquent taxes on your behalf?
If that was the case then they can and will escrow for the delinquent taxes and insurance and the current taxes and insurance to protect their interest in the property.
If you were not delinquent on taxes and they did not have to be paid on your behalf by the lender and you were not escrowed for taxes previously........then the lender most likely would consider still allowing you to pay those on your own...........but only if you did not allow them to go delinquent prior to the modification.

[elpjohnson]

This is completely normal....they added interest, fees and cured escrow onto my principal balance and I was never late......I took the mod because it was the best offer I was going to get from them.....