Forbearance end and loan modification

Submitted by hauntedavacado t3_yg893u in personalfinance

Thanks in advance to anyone who reads and responds.

Purchased home with a fha loan in 2019. 2020 went in forbearance due to unemployment, didn't fully understand the gravity of the situation because loan servicer advised they would assist me once back on my feet. They advised I would be able to chose to repay the balance over time or tack the owed payments to the end of the loan.

Now that I have actually gotten the loan modification documents, that is not the case. The offer is to roll the owed balance into the loan, but my interest rate goes from about 3.5 to about 7.5....increasing the monthly payment from 1900 to 2600.

I have about 15k in cash. The past due amount is about 52k. Credit is about 720 if that matters. About 20k in retirement account from company that let me go back in 2020- not sure if this money is touchable.

The loan servicer said this is the only option they can give me. The first 3 payments are a trial, so if I can come up with the money to pay the balance in the next 3 months, I can bring the account current and keep my interest rate.

Wondering if it would be possible and if it would even be a good idea to take a personal loan for the 37k and bring account current to keep that lower interest rate.

Or am I SOL and just have to eat the newer higher payment? It will be at the top of my budget...what are the chances of being able to bring the interest down I the future?

I at least feel better browsing this sub and seeing a lot of people were misled by forbearance options from their lenders. Curious to see what feedback is on my situation.

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DookieHoused t1_iu7iljw wrote

Did they refer to this as a deferral? Your interest rate should not increase. Which lender?

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hauntedavacado OP t1_iu7j3wm wrote

"Fha Hamp pc/mod combo" is what the document says. Through amerihome.

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SlyTrout t1_iu7ixjs wrote

I am not an expert in this area, but from a quick search it looks like you have different options based in what kind of mortgage you have. See the article below. It might be worth discussing other options with your lender.

https://www.forbes.com/advisor/mortgages/what-happens-after-mortgage-forbearance-lifts/

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hauntedavacado OP t1_iu7jjc7 wrote

I have found it incredibly hard to get in contact with anyone who can actually help. The whole process of applying for the modification in the first place was very difficult and all done through a document portal. Months of me submitting documents and then waiting for them to be reviewed just to find out the document wasn't exactly right, or that they needed additional doca. When I do call and speak to someone on the phone, they are never able to give me any information more than what I can find already in the portal.

Any advice for how i can get in contact with someone who actually has the power to assist me? Is there a trick to that? Does my mortgage company just have terrible customer service?

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SlyTrout t1_iu7mo0j wrote

I have never had a mortgage so unfortunately, I don't have any experiences that might help.

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laziestindian t1_iu7jw6q wrote

  1. A loan to pay a loan is 99% of the time a terrible idea...

  2. Check who currently owns your loan, if it is Fannie Mae you have options they aren't giving you.

A payment deferral plan is probably what you want and one of the options they mentioned previously, this assumes you have been reemployed and can make payments again. This puts the deferred amount on the end of your loan and should not affect the interest rate or payment.

A repayment plan spreads the balance out over some or the rest of the loan term but, again, it shouldn't be increasing the interest rate.

Loan modification is what they're pushing but in this case it hurts you instead of helping.

  1. For either payment deferral or repayment there may be additional paperwork you need to file. Talk to them specifically about these plans and whether they are options, getting in writing is best.

  2. If these are not options for some reason the higher interest is about the same cost as adding a 37k personal loan which they aren't going to want to give to repay a different loan. The higher interest also doesn't wipe your savings...so personally I'd take it, be frugal, and refinance somepoint after you own at least 20% of the house and rates have decreased at least a bit.

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hauntedavacado OP t1_iu7k9sr wrote

How can I find out if my loan is through Frannie Mae? Do I just call the servicer and ask?

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laziestindian t1_iu7mzs5 wrote

Yeah, call and ask. They would have also sent you a notification at some point if/ when they sell it, though it generally doesn't change anything for you in terms of normal payment, so you may not have noticed.

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