Tuesday, January 7, 2014

Mortgage Modifications for Million Dollar Mortgages

After rejecting a mortgage loan modification application I had submitted for Lake County clients with a $2.1 million dollar mortgage, a Chase Loss Mitigation Supervisor/Manager chastised me, saying:

"Loan modifications are not for people with million dollar mortgages. They are for low and middle income homeowners who have experienced financial difficulties. They are certainly not for the wealthy with multi-million dollar homes."

That is simply not true!  Months after that conversation, we obtained a principal reduction modification for these clients, with approximate terms as follows:

  1. The new mortgage balance would be reduced from about $2.1 million to less than $900,000.   Over $1.2 million of the principal balance was forgiven...wiped out, erased.
  2. Mortgage payments were reduced by over $5,000 per month.

We obtained a modification for another family with a multi-million dollar home in which their monthly payments were reduced from a whopping $17,000 a month to less than $6,000 per month.  For that family, we also obtained an EXTINGUISHMENT of their second mortgage of over $450,000, under the National Mortgage Settlement Agreement, a/k/a the Attorney General/ Department of Justice Consent Order.  That means the second mortgage was completely forgiven by the lender.  My clients no longer owed the $450,000.  That's like winning the lottery! That also reduced their monthly housing payments by another $1,300 per month, for a total savings of more than $12,000 per month.

The above are just two of many success stories with jumbo and million dollar plus mortgages.  If you have a mortgage balance exceeding the HAMP Mortgage Limits, don't assume it can't be modified, and don't accept the response from a lender representative telling you so.  Your mortgage may be too large to qualify for one type of modification, but not for all types.

Note that it is a good idea to get professional help with any loan modification application.  However, for large mortgages, like the ones above, the cost of good legal representation is miniscule compared to the size of the benefit it can bring the homeowner.  The cost of good legal representation might be far less than your savings for just one month.  Also, with the availability of principal reductions and extinguishments today through Principal Reduction Alternative HAMP "PRA HAMP," HAMP Tier II, the AG/DOJ Consent Order, and other programs, you might feel as if you've "Won the lottery" when you receive your loan modification.

Finally, whatever you do, don't just walk away from your home because you think your mortgage is too big to be modified or because your home is underwater, i.e., you owe more than it's worth.  Apply for a loan modification with principal reduction first... but that's another blog for another day.

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