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Principal Writedowns Make for Better Loan Modifications--But Nobody Does it

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When I bought my house I was a school teacher with a Masters degree,that was 9 years ago. I had an income of 61,000.00 a year at the time. My wife has a job that pays less than $30,000.00 a year.
When we bought the house we had a combined income of approximately $90,000.00 per year. Less then two years later I became very ill and had to resign from my teaching job. Our income, after receiving a permanent social security disability award, at this time became $48,000.00 and still is. 90,000 to 48,000, I say yipes.
I am not behind on payment but I had to refinace. I had no worries at the time of the refinance, I have been alive for 58 years and don't remember in my adult life ever seeing house values do anything but rise. The first and best investment a man ever makes....his home.
I have feelings of responsbility and can not wait until I am behind on payments. I don't even like to be late to church. being behind would cause to much stress and bad thoughts of insecurity.
I need a break. I have three chronic ailments in three major organs. I have had a heart attack recently. I will not be working many hours at much work ever again unless a get a shot of miracle energy.
I am hoping for this loan mod. taht I am working on through a company called MOD101 to save my house so I have a good place for my family. Anyone woked through this company already?

craig of WA 4:50AM March 18, 2011

The only way in this economy to make a difference it to lower the principal on these inflated home mortgages. The Banks, Wall-Street, and the investors all got rich. But, one thing they forgot in the game--was in order to keep the ball running ; and their pockets to continue to get fat, is that the little man must continue to pay his mortgage principal and interest in order to keep them rich.
I agree with the first writer; walk away; start over; its only a material superficial product that can be purchased again. I understand the American Dream, but it is a new world, and the American Dream does not exist anymore. Their are no jobs, no banks lending, millions of people filing bankruptcy on a daily basis.
The question to ask is did they feel sorry the middle man when the shipped the jobs abroad to save their companies and make their pockets fatter, or was is just greed.
Think about your-self and how much money you can save, by giving the merchandise back to the bank, and learning from you mistakes. Life goes on, but you will never pay off a mortgage on a home that has no value or no equity in it.
Banks, and Investors-No the game-they knew exactly what they where doing, and you better believe it. This was just a way to recycle the money and continue to make more. Think about it this way, you made payments, did you see a decrease in your principal, did you see the money go into your pockets? Better yet to got the MONEY! SHOW ME THE MONEY!!!
PEACE

Britney Dunn of IL 2:15PM September 09, 2010

I have a first with Bank of America and have sent several letters asking for a modification. Unfortunately even with a reduced income we do not meet the criteria for any program available to responsible home owners. I have a second as well and I am really at the tipping point to decide that I am gonna quit making my payments. I can make them but why? The house will never be worth what I owe on it. I am prepared at this point to wait out the bank for a principal writedown that is the only modification that make sense for me. I have 25 years of working life to let this go and rebound with something for the future. If they can help the guy that bought a house he couldn't put furniture in, they can help me.

jj of FL 10:14PM March 03, 2010

You guys are nuts. If my neighbor got a reduction and I was still underwater I'd dump my property in a New York minute -- the only way to avoid being victimized by this trend would be to join it. Now multiply that by millions of homeowners and you see why it won't happen. The unfairness would be just too much. Then the investors would sue and Wall Street would come down too. Bottom line, these things should only be available to truly needy people in bankruptcy proceedings -- not every chump who doesn't like his real estate investment.

s2kreno of NV 8:37PM February 23, 2010

The rub is that while everyone understands that the banking and financial industries are culpable players in the mortgage meltdown, which in turn propelled the spiral of homevalues, our government cannot see its way fit to get tough with the banks and compelthem to meet homeowners halfway.Hense,taking responsibility for their own bad behavior. This, in many cases, should include principle reductions that split the diffence of the reduced market value with the homeowner.

Shelly Dodson of NV 9:36PM February 21, 2010

Believe it or not, GMAC solicited us to do a principal reduction refinance. We had to qualify with good credit, good percentages, and be current on our house payments. We qualified! Now, I'm not saying it was an easy process.
The first person I worked with could hardly speak English and was one of the biggest freaking liars I ever spoke with. Either that or he didn't have a clue about what he was talking about. He was a bad communicator and didn't return my calls or emails several times over the course of the 5 months I dealt with him.
When my file was transferred to a woman, I started getting results. Finally, six months to the day of when I started the process, we recorded on our new mortgage.
I was grateful for the loss that they took and for the huge reduction in my mortgage payment. After taking a 40% cut in pay when I changed jobs, the reduction in my mortgage payment will certainly help the budget!
Have faith and keep trying - it was so worth the hassle!

Grateful of AZ 2:35PM January 19, 2010

I LOVE this article because it outlines what REALLY needs to be done. The crash of the Real Estate Market led to drastic decreases in home values. I don't want to be upside down in my home and just get a modified loan to pay it all back. If my home was worth 500k and I owe 400k, and now it's market value is 200k, the bank should split the loss with me and refi me for 350k. It's only fair. The problem is, no bank is going to go for it without a mandate. They are too big and overwhelmed to think straight. So they foreclose and take 150k on that same home at auction, but writedown the losses and get bailout money anyway. There's still no incentive to make good business decisions after all we've all gone through.

BusinessDecision of CA 5:26PM November 06, 2009

Yes, that was included in one of the scenarios proposed for this government flop of a plan. And it was a fair deal. But banks were still allowed to consider a principal reduction as optional. So, why should they be expected to do anything if there is no mandate?

Brilal of FL 3:57PM October 24, 2009

Paaaaalease,,,You dont think anyones is buying your post do you. Just try getting a human on the phone at a bank if you have entered the foreclosure circus. If you do happen to get someone on the phone the person answering the phone is in India, (HSBC). Each time you call it is an endless circle of the same questions and no one will help solve a problem which in many casees such as mine is temporary in nature. The Obama plan is a total sham and failure and banks want no part of it and their canned explanation is always you dont fall under the guidelines even thou I do and I am currently working with a no fee loan modification mediator. Once you get all the forms they want submitted they ask you for them repeated ly each time you call and they say calls in in 30 days. Obviously you have no clue what the real world is experiencing are you.

Jenna of NJ 1:52PM October 22, 2009

Trying to get the Modified Mortgage Loan is a nightmare. I have been trying with the Flagstar Mortgage company since March of 2009. Did everything they have told me to do . During this process they sold my mortgage back to Nationstar who sold it to Flagstar the year before with the promise the new mortgage company will continue to go through the process. I am still waiting and trying to hang on to my home. It is now almost November, I want to get off this MerryGoRound.

Eve of TX 11:10AM October 22, 2009