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Are Loan Mods Worth the Trouble?
Real Estate News Overview:
Since the inception of the Obama administration’s $75 billion program to reduce foreclosures by encouraging loan modifications, the plan has led to offers of more than 190,000 mortgage modifications with lower monthly payments, according to the Treasury Department. During that time, lenders either have started or advanced foreclosure proceedings against more than 1 million homes, according to RealtyTrac. About 20% of those were foreclosed upon and repossessed. The Center for Responsible Lending says 2.4 million Americans are at risk of foreclosure in 2009, and 8.1 million could be over the next four years.
Real Estate Investor Coach Response:
Here is the long and short of what this means. It is taking about 45-60 days for lenders to respond to the modification inquiries, and another 3-5+ months for a modification to become final. Therefore it is a very slow moving process so don’t bank your business around cash flow from loan mod “brokering” if that is what you are doing. As for me personally, I’d much rather attempt the short sale and buy the property. Now, not all sellers want to sell, and they would rather hope for a loan mod, but remember they have to qualify, which means they have to have acceptable income, employment, etc. Instead of giving up on a seller who says they would rather do a loan mod, I believe you should go for the “I’ll try to buy your house through short sale” pitch one or two more times before offering the loan mod route. The financial reward is much greater than that of a loan mod and it is about the same amount of time that goes by in the process.
To your Real Estate Investing Success,
Brian Evans
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