Cat,

Would you recommend to accept this type of ballon mod? Since it is not an interest free principle forberance, but a 4o year amortization schedule due to 23 years, it may not be a good mod.

I can not speak for you, but I can tell you that I have personally accepted a modification on my own home that has a non interest bearing balloon without payments due on it until 25 years from now. We each have our own threshold of tolerance and in my case I didn't care in the least. Alot can happen in 25 years and all I was looking for in a modification was exactly what it had been put in place to accomplish, and that was an affordable payment. My property is 150k underwater, and again I personally do not care about that. I applied for the modification to bring my payment to an affordable level when I lost a significant amount of income and that is what it is designed to do. My payment is now less expensive than rents in my area and I am still a homeowner.

this is a part of the unpaid principal that you owe.

Here is an example:

You currently owe

**$300,000 **in unpaid principal total along with all past due interest capitalized.

In order to get you to an affordable payment, because they just are not able to do it on the $300,000 amount, the servicer has to split off $100,000 of that $300,000, and puts it as a non interest bearing, non amortizing balloon payment.

Then the remaining

**$200,000** is amortized at the interest rate given over the terms given to arrive at the payment you will be making.

So that $100,000 is still there, you just wouldn't be making the payments on it, however, if you sell, transfer, or refinance the property, it will of course be due as it is a part of the original unpaid principal balance that you still owe even without a mod. What you need to understand is that the lender isn't

**forgiving** that amount, they are

**forbearing** it.