My homes value has dropped significantly with all the foreclosures in my area. Appraised at just 68,000! I owe 178,000! Would my mortgage company be more willing to help me stay in my home buy making my payments more affordable than to add one more forclosure to the LONG list in my area? To me...It would benefit them to help me stay in a home I have been living in for that last 13 years.Would my mortgage holder be more willing to work with a loan modification if home is valued less than owed?
No. It makes them less likely and less able to help you. Loan modifications only reduce payments, they don't change the principal owed. Since you are so far underwater, they know that you are more likely to default than other people they could help.
Plus your mortgage payment will have to exceed 31% of your gross monthly income for them to even talk to you.
good luck!Would my mortgage holder be more willing to work with a loan modification if home is valued less than owed?
At a 5,000 foot level I agree with you. Loan modifications also are based on payment history and ability to continue paying. Banks are more willing to work with folks who are struggling than folks who look like they have given up. If you have been making payments or attempting to and you have a decent cash flow, they should be very encouraged to work with you on a modification.
Just know, that the owed amount will increase even if your payments decrease. Can you live with that? If so, give it a go.
Of course they are better off working it out than taking that kind of loss, but it comes down to figuring out what the problem is and whether or not a modification can result in a long term affordable solution for you.
On the other hand, for some lenders foreclosure is just a cost of doing business.
Contact your servicer to discuss your options.
you will not know until you ask. Prepare your case to present to the lender with comps and stats from your immediate area.
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