Refinance after a loan modification

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
Jan 14, 2011
2,111
182
63
San Diego, California
www.loansreduced.com
Recently a few people have reached out to me that had a previous loan modification looking to refinance. We have updated our guidelines a few months ago and thought I would share that with the community.

We will refinance a loan that has been modified as long as the payments have been made on time for the past 24 months.

Most lenders have very strict criteria on refinance loans previously modified, here's a few examples:
  • NO Principal forgiveness
  • NO Extension of loan terms
  • NO Balloon Payments
  • NO Principal Forbearance (Where they add the balance to the rear)
  • NO Serious Adjustments to the current loan

These are NOT a problem with us, you just have to have made 24 payments on time.
 

Evan Bedard

Call 1-800-779-4547
Loan Safe Mortgage
Aug 26, 2007
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48
San Diego, California
www.LoanSafe.org
Thanks for the update Erik, this is excellent information for members here looking to refinance post loan modification! We've been seeing other lenders require the standard 3-7 year waiting period if the account was in serious default prior to completing the modification.
 

Garybaldi

LoanSafe Member
Jul 24, 2012
32
0
0
Thanks for the info.
My loan was modified 3 years ago. Just the interest rate to 3.0%. It expires on 3/1/14 so I was wondering who can help me to refi?
Loan amount=303K with Capital One
Property value=525K no 2nd- was forgiven by BOA
Location=Burbank CA
Credit= not good, no mortgage late past 3 years
Loan to income ratio under 31%.
Thanks in advance.
 

Joeywah

LoanSafe Member
Feb 16, 2014
3
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0
Hello Eric, I have a few questions if I might ask, about 4 years ago I got divorced and decided to keep the house which is naturally underwater as a lot of homes are in Arizona. My 1st mortage and 2nd were both owned by Bank of America. I was able to get a modification after a year of struggle since Bank of America was giving me the run around, what I mean by that is I received nothing but bad info from whoever I spoke to in the bank. I was told to apply over and over again and then my application was turned down do to some I not being dotted or some T not being crossed. Finally both loans were sold to Green Tree again a nightmare. Green Tree kept stating that a modification was just not on the table because I never missed a payment. I did my homework and contacted Fannie Mae myself and was lucky enough to contact someone who shall remain nameless and she coached me on what to say and do with Green Tree. A year after the start I finally received a modification on my 1st and 2nd mortgage based on my divorce and loss of income do to it and the economy. I cannot complain about the mod the 1st mortgage was reduced to a 2% and the 2nd mortgage to 1% the bad part is my ex wife's name still remained on the 1st mortgage the title of the home was signed over into only my name, 2nd mortgage has always been in my name only. The ex wife was okay with all of this until last December when I remarried now she wants her name off the 1st mortgage and has taken me to court to force me to either short sale or refinance. Well I am in the process of refinancing knowing that I will never get a 2% intrest rate again. I have opted to go with a 5year ARM vs a 30year fixed do to the intrest rate is better and more affordable. What do you think of ARMs today and what advice can you give me.

Thanks you in advance for your time/

Joey
 

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
Jan 14, 2011
2,111
182
63
San Diego, California
www.loansreduced.com
Hi Joey,
Sorry to hear about everything that's going on but would love to give my opinion on an ARM vs a Fixed.

Oddly enough right now it seems as if everyone wants a 30YR/Fixed, why because they're "safe" and the payment will never change. The strange part about that is history shows most borrowers will refinance approximately every 3-5 years either to pull cash out and make upgrades, lower rate or even scenario's like yours occur. I myself am a fan with ARM's because the payment/interest rates are extremely low and I've seen many of them either stay the same or adjust lower when the fixed rate period ends. Then again we really don't know what will happen in the future with interest rates so this advice could be a little toxic, I wish I had a crystal ball!

Another thing to consider are the ARM's max adjustment rate & cap. Meaning after first 5 years the loan can go up 1% from a starting rate of 3% to 4% year 6, 5% year 7...etc. Then there's also the cap rate which your interest rate can't exceed a certain percentage, maybe it's 5% above the start rate, if that's the case the max rate would be 8% that you could possibly pay on the loan if the absolute worst case scenario happens. It can also adjust lower with the market, I guess you can consider it like gambling.

Good luck whichever direction you decide to take and if you need any help don't hesitate to ask.