Short Sale or Loan Modification in Michigan. Which is best in order to avoid Foreclosure?

Short Sale or Loan Modification. Which is best to Avoid foreclosure?

Short Sale or Loan Modification. Which is best to Avoid foreclosure?

Most people know very little about loan modification and how it affects you and your finances and should you even do a loan modification; that’s the question.
The statistic presented the other day on official government statistic that I saw on a website was that only 16.6% of loan modifications that were applied for in the last 24 months had been approved. Now, that will shock some people but doesn’t surprise me a bit because here is the logic behind a loan modification – a loan modification is when they basically say, “Okay, we are going to reset your mortgage. We will reset your payments.” Rarely do they change the terms of your mortgage, the interest rate, or anything like that. Usually what you are paying monthly will stay the same.
Why then do they ever approve someone for a loan modification? The logic behind it is that you have to be able to afford your house to be able to stay in it and most people have lost their high-paying jobs, they are not getting the same jobs or it is costing more to live than it was two years ago as I am sure you are well aware. In the meantime when they stop making their house payments, they had a lot more debt accumulated and now they have to get caught up with that as well. Suppose you are nine months behind on your mortgage, at a $1000 a payment, they say, “Okay, let’s start over again.” They tack that $9000 to the end of your mortgage and start it again.
Typically when someone’s got a mortgage that they are in trouble with, they got the mortgage between the years of 2002 and 2008, when people were out there buying at the top of the market. So, if you bought a $200,000 house and the market crashed in 2006 all the way through 2008, it’s still kind of falling right now, we lost 30% to 50% depending on what you bought and where you are – 30% to 50% is gone from that number. So, my $200,000 house, if I had bought one in that time period would be worth around $100,000 to $125,000. Now, should you modify that loan? Only you can answer that question because it’s your money, it’s your finances. Ethically, you owe that money.
So, what they do is they take that $9000, they tack it under the end of that mortgage and then you have to pay that money back too and you are financing that amount as well.
This a great deal for your bank because you get to pay interest on interest for 15-30 years on $9000. That’s roughly $27,000 in interest that they are going to make additionally. So, of course they should do a loan modification if they can and then they now get you for another $27,000, not to mention that your house is probably worth less than what you paid for it, and most likely worth LESS than you owe.
Loan modification is not necessarily your salvation unless you have a really great reason for staying in your house other than pride, or you like the neighbors or something like that. Financially you have to decide what your best move is and whether it is to your advantage to do a loan modification at a 16.6% approval rate and figure it out from there.
Now, the second statistic I read was pretty disturbing and I saw this on a Fannie Mae website. So, this is another government statistic; take it for what it’s worth – 75% of the people who do loan modification end up going into foreclosure anyway and many of the Lenders knew this would happen before they started the loan modification process in the first place.
What they were trying to do is trying to stave off the number of foreclosures that were coming through the pipeline at one time. So, they were going to delay the number of foreclosures so it didn’t choke the marketplace and have the real estate market crash even further.
Now, if you did a loan modification and still can’t make the payments or you are trying to do one and you are finding it’s not working for you, the best solution is probably as short sale. A foreclosure will stick with you for a long, long time on your credit rating (7-10 years) and your mortgage company does not want to foreclose on you, they do not want your house, no matter how nice it is. They want your mortgage to stay in place and for you to continue to pay it.
So, if you had a $200,000 mortgage and your house is only worth about $125,000, you could pay that money back – or- this may be your only opportunity in the next 25 or 30 years for you to escape that negative equity trap that you are in.
I am talking about a short sale. We sell your house “short” (for less) of what you owe. If you don’t know what a short sale is, go watch some of my other videos ( I explained short sale process, why your bank wants to do a short sale, and how to go about setting it up.
Believe me, it’s very expensive for a mortgage company to foreclose on you and there is no benefit in anybody going through a foreclosure unnecessarily. We can probably sell your house for less than what you owe and work out the financial details so that your credit is saved to a lot greater degree than if you were to go through a full foreclosure.
Now, if you choose a loan modification and it works for you, great, everyone’s happy for you. If you choose loan modification and it doesn’t work out for you, then probably your fall back position is going to be a short sale. You need to just get rid of the debt, get it gone, go on to something else.
We can help you repair your credit. We can point you in the right direction of resources that will help you heal.
The bottom line is this – you get to decide whether loan modification makes sense for you or not. You might be better off just going ahead and liquidating the house, starting fresh, reset your equity at the base prices, and get started back over again like so many other people have done.

Clint Maki is a Realtor (25 years experience) in the state of Michigan and specializes in helping people avoid foreclosure, short sales REO properties and credit rating protection strategies.
Clint Maki contact information:
Foreclosure and Short Sale help:
PHONE: 616-837-7630
Skype~ clint.maki

About Thresholds For Living Realty

Thresholds For Living Realty Specializes in ULTRA SUCCESSFUL Real Estate Technique. We not ONLY train the best Realtors accross the nation, we also sell homes in ALL of Michigan. Here are a few Tags for people to use that reflect our true purpose here: michigan homes for sale, michigan homes, michigan condos for sale, michigan condos for sale, realtors michigan, michigan mls. michigan condo for sale, mi homes for sale, mi mls, houses for sale michigan, mi condos for sale, homes for sale, foreclosed homes, realtors, realty, realtor, real estates, home for sale, home search, house for sale, for sale by owner, home search, house for sale, for sale by owner, short sale in michigan, short sale law, notice of foreclosure, pre foreclosure sale, foreclosure proceedings, foreclosure notice, home foreclosure process, foreclosure eviction, second mortgage foreclosure, foreclosure short sale, short sales in michigan, pre foreclosure short sale, mortgage short sale, short sale services, short sale service, how to short sale, short sale definition, get out of foreclosure, prevent foreclosure, preventing foreclosure, foreclosure options, foreclosure questions, short sale information, foreclosure statistics, foreclosure news, home short sales, short sale magic, how to buy a foreclosure, pre foreclosure list, forclosure property, mortgage law, how to prevent foreclosure, foreclosure consequences, buying foreclosed property, mortgage foreclosure help, how to avoid foreclosure, free foreclosures, mortgage forbearance, foreclosure bailout, short sale in foreclosure, short sale homes in michigan, stop foreclosure sale, foreclosure or short sale, foreclosure training, foreclose or short sale, short sale forclosure, short sale foreclosures, short sale experts, short sale leads,
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