Negotiating an Interest-Only Loan Mod

[pattona]

Hi everyone,

I have posted my whole story under the "Tell Us Your Story" thread under "Intra Mural Wars between Two Related Lenders".

I'm posting here because I have a quick question. Has anyone been successful negotiating an Interest-Only (I-O) loan modification?

I feel bad because the 1st is offering me a 30 year fixed rate mortgage @ 5.5% fully amortized. Really a dream offer given the LTV is about 95% for a non-owner occ loan mod.

The existing first is one of those 5 year fixed, converts to 1 yr LIBOR ARM. There is one year left before the conversion.

The problem is that by fully amortizing the loan, the payment increases by $500/mth thus creating a $300/mo negative cash flow. Under the existing I-O scenerio, the property cash flows with a small positive.

I will net 25k or so from the sale of another property, so I do intend to start paying down the principle of the loan and then making monthly principle payments with the goal of fully amortizing the loan over time.

[Ellen]

Hi Pattona,
I recently negotiatied a loan mod with WAMU interest only at 5.57% fixed for forty years no amoritization. Your deal sounds much sweeter. Hope this helps!

[pattona]

Thanks Ellen, that was helpful. It's good to know that I am not breaking new ground negotiating an I-O loan as part of the loan mod.

Like I said, I feel bad not accepting the 5.5% fixed rate loan but I just can't make the numbers work right now. Thank goodness I have the experience and discipline to create my own amortization schedule.