Mortgage Modifications (and short sales) have been presented as the medicine to cure the Foreclosure Disease.  But many years now into this disease called foreclosure, it’s certainly looking like mortgage modifications are not such effective medicine. Which leaves the consumer with two choices:

1) Accept a Mortgage Modification or; 2) Fight Like Hell And Win Foreclosure!

In most cases, the choice is easy…if the bank refuses to present a good modification, why not take the chances and fight like hell to win the foreclosure case?  The bank will certainly be far more likely to negotiate after a loss than when consumers approach, hat in hand begging for a little mercy.  Let’s take a look at the Florida-specific data to understand exactly what the numbers on mortgage modifications look like:

In the second quarter of 2013, 12,116 proprietary (non-HAMP) permanent modifications occurred in Florida. This increased the amount of modifications provided to homeowners in Florida to a total of 382,243 since mid-2007. The average loan count of Florida in 2013-Q2 was 2,374,444 and 7.97% of those loans were delinquent (MBA Methodology). There were also a total of 11,531 repayment plans initiated throughout Florida in the second quarter of 2013.

There are real troubles buried within these mortgage modification numbers.  Troubles for homeowners and troubles for the banks that made the modifications.

I will be clear about the trouble with mortgage modifications for homeowners….signing a modification may help the bank correct many of the problems they have…problems that may prevent them from winning a foreclosure.  Accordingly, every consumer should think long and hard before signing a modification.

The problems for the banks?  Well….I’ll just sit on that for a while.  Just a little while.


One Comment

  • Anonymous Poster says:

    So 2,374,444 loans, 7.97% are delinquent. Although delinquent can mean 1 day late or the end of a foreclosure case. But for sake of argument that is 189,243 loans delinquent.

    Also it is not clear if that amount BECAME delinquent or WERE delinquent overall in Q2. Big difference.

    Again for sake of argument lets say that is BECAME delinquent in Q2. 12,116 NON-HAMP loan mods in 2013 Q2. 11,531 in repayment plans. What about HAMP mods? Let’s say HAMP mods are another 15,000 minimum (these are the vast majority of mods given so likely much higher). So you’re telling us that well over 20% of people in the State of Florida getting modified who are “delinquent” is somehow a bad thing?

    I am not sure what is being advocated here, if it is do what is best for the homeowner or to “fight the power at all costs” hogwash, but those are pretty decent numbers compared to how it used to be.

    Figure another 25%+ of FL homeowners will not ever qualify to modify the loan that they have as completely unaffordable at their current income.

    Another good chunk of the 50% or so remaining may have not applied for a mod yet, or are waiting a bit to apply.

    Sometimes signing a modification is the ONLY way for the borrower to keep their property. I cannot agree with the tone of this article of “fight the man at all costs” and to be leery of every offer the bank makes.

    This seems like a positive trend for Florida borrowers even though it takes the $ and glory away from the defense lawyers by settling in their client’s best interest.

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