Do we REALLY need to be destitute and in default to be approved for a Mortgage Loan Modification?
(Santa Barbara, Calif)
You have stated earlier that they will look at accounts that are in default, but if you're still
making mortgage payments on time, they will essentially put you on hold. I wish you had more
documentation about this. Can we rely on the info given above so we know its better to stop
making the payments?Mortgage Loan Modification Answer:
It is illegal for anyone to tell you to go delinquent in order get approved for a mortgage loan modification.
It is well known that banks give less priority to loan modification applicants who are still current on their payments. It is not impossible to get approved for a loan mod while current on your mortgage payments, but it seems that banks tend not to think that you are in hardship if you are still able to make your payments. Going delinquent does have the consequence of ruining your credit, and only you can determine if it's worth it. Of course, credit repair is always an option, and your credit can be restored.
You may be in imminent danger of default, but if you are still making your payments, your loan is still a performing asset for the bank.
If you are currently using your savings and cash reserves to pay your mortgage, it is your choice if you want to deplete them first and then go delinquent when you absolutely have no way of making your payments anymore. That is your choice. Whether it's a wise choice or not, it's up to you.
The only way to really find out is to go ahead and apply for a loan modification while still current on your payments and see what your bank says. You will have an opportunity to re-apply if denied.
Since you are in California, you can apply through a No Upfront Fee Loan Modification Company
and risk no fees upfront.