loan modifications

[ERICOPOLY]

This story claims that Wells Fargo is willing to cut your payment down to 2% interest if that's what it takes to keep you from walking away. 

 

I take it that solves the 'jingle mail' risk for now -- a 2% interest rate would result in payments lower than renting a home elsewhere.  Meanwhile as long as interest rates are this low it is still a profitable loan for the bank even at 2%.

 

There are even people getting 0% temporary interest rates from some lenders.  That ought to completely eliminate the risk of somebody walking away from the loan!

 

http://money.cnn.com/2009/12/16/real_estate/great_mortgage_modifications/index.htm

 

For example, Californians Steve and Elena Servi received a 2% fixed-rate loan from Wells Fargo that replaced the 6.75% adjustable rate mortgage on their Rowland Heights house.

 

In the case of the Servis, their house had lost perhaps 40% of its value since they purchased it five years ago. Repossessing the home would have cost Wells Fargo more than $100,000 in lost value alone, plus the legal expenses, commissions, taxes and other expenses the bank would have incurred.

 

 

[bargainman]

Don't get too excited:

 

"Still, just a paltry 4% of all homeowners in need of workouts are receiving them."

 

I still hear that banks are very unlikely to do a loan modification.